Bluetooth headphones paired but Disconnected. "Failed to initialize"

[Mugsy]

I have a mystery on my hands. I received a Bluetooth speaker as a gift. The BT-4.0 adapter plugged into my computer (USB-2.0 port) detects it (as a "Bluetooth headset"), but when I try to select it as my output device (from the "Sound" Control Panel), Windows reports it as "Disconnected".

If I open "Devices and Printers" and right-click the "Bluetooth headset" icon, I get an alert that the device "Failed to initialize".

I've tried rebooting, tried a different BT adapter, updated my BT drivers off the makers' website, Device Manager shows everything is connected & working (including "Bluetooth Audio").

64bit Win7 Home. Inateck BT-4.0 usb adapter. Speaker is a "MicroBoom" BT v2.1:

Any ideas?

PS: Eliminated the obvious. Speaker is fully charged and works just fine with my phone.