You get this error if the drivers are not updated, or if the driver has gone corrupt (For example: the Vista Service Pack / updater apparently install the Windows driver over the manufacturer's one)
Steps I would suggest are:
1. Update Bluetooth Device Driver. Steps to update the device driver:
i. Click on Start
ii. Select Control Panel
iii. Select System and maintenance
iv. Click Device Manager (If you are prompted for an administrator password or confirmation, type the password or provide confirmation.)
v. In the Device manager locate the Blue tooth device
vi. Click the Driver tab, and then select Update driver
Link for reference: Update a driver for hardware that isn't working properly
http://windowshelp.microsoft.com/Windows/en-US/Help/b3c6477e-1111-4b9f-a52a-fffdc51e9c901033.mspx
2. Uninstall the Bluetooth device, restart the computer and install the latest drivers.