Altera DE2-70 (DE2-70+LTM+D5M) Kit Not Working

[Altera_Forum]

I recently purchased the Altera DE2-70 Digital Camera Development Platform (DE2-70+LTM+D5M), and was doing the original startup check as outlined in the manual: 

 2.3 Power-up the DE2-70 Board The DE2-70 board comes with a preloaded configuration bit stream to demonstrate some features of the board. This bit stream also allows users to see quickly if the board is working properly. To power-up the board perform the following steps: 1. Connect the provided USB cable from the host computer to the USB Blaster connector on the DE2-70 board. For communication between the host and the DE2-70 board, it is necessary to install the Altera USB Blaster driver software. If this driver is not already installed on the host computer, it can be installed as explained in the tutorial Getting Started with Altera's DE2-70 Board. This tutorial is available in the directory DE2_70_tutorials on the DE2-70 System CD-ROM. 2. Connect the 12V adapter to the DE2-70 board 3. Connect a VGA monitor to the VGA port on the DE2-70 board 4. Connect your headset to the Line-out audio port on the DE2-70 board 5. Turn the RUN/PROG switch on the left edge of the DE2-70 board to RUN position; the PROG position is used only for the AS Mode programming 6. Turn the power on by pressing the ON/OFF switch on the DE2-70 board  It says after this point I should see the following:  At this point you should observe the following: - All user LEDs are flashing - All 7-segment displays are cycling through the numbers 0 to F - The LCD display shows Welcome to the Altera DE2-70 - The VGA monitor displays the image shown in Figure 2.3. - Set the toggle switch SW17 to the DOWN position; you should hear a 1-kHz sound - Set the toggle switch SW17 to the UP position and connect the output of an audio player to the Line-in connector on the DE2-70 board; on your headset you should hear the music played from the audio player (MP3, PC, iPod, or the like) - You can also connect a microphone to the Microphone-in connector on the DE2-70 board; your voice will be mixed with the music played from the audio player  But I don't see most of these things occurring. The LEDs aren't flashing, the 7-segment displays aren't cycling through, the LCD display doesn't show anything, the connected VGA monitor shows nothing, and I don't hear music / sound.  What I do have is the 7-segment displays each showing "8", the blue light is on near the power adapter connection, and the display (LCM) is greyed out with lines through it at various points. I have tried using the "Control Panel" software with limited success. At times, I have gotten all the LEDs to light up, but nothing still goes to the display. Other times, the "Control Panel" software doesn't even communicate with the kit.   Do I have a bad kit or am I doing something wrong. I have installed Nios II version 7.2, and am running Windows XP. My PC does recognize when I connect the USB cable to the kit.