Caleb,
I'm still thinking that you're not having a problem with the receiver, but the communications between your receiver and your laptop. I don't recall ever seeing an error message indicating "ping" without it being a comm issue.
First, unplug your XM receiver from your laptop and see what your indicator light shows. Is it red, flashing green and red, or no light at all? Do a complete shutdown and restart, then boot up your computer. After all booted up and ready (give it a minute or two), hook up the receiver and see if you hear the "da ding" sound (the computer recognizes the receiver being hooked up... but DO NOT start the XM Link software. Take a look at your receiver now. Is the light doing anything different... it might go from flashing red to flashing green and red or just flashing green (don't recall and don't own one now, but I've had these types of issues so I'm trying to think it through and help.) If the lights are changing, then we're getting somewhere.
NOW... launch the XM software. When you get that error message (red window box), just close (CANCEL) that and hopefully it will ask you if you would like to set up communications. Select "yes," and then go through each comm port to ensure you're using the right comm port on the computer. Sometimes, if you unplug the receiver and it's set up on a port, you might have forgot to plug it back in the SAME port, therefore causing a comm issue. If I recall, once you set it up the first time, you need to always plug it back in the SAME port you used, as it's set up on that particular port. Keep giving this a try.
Also, you might go to the control panel, system, advanced, device manager to ensure you have no yellow exclamation marks indicating trouble with your USB port drivers.
Keep plugging away. I've just got a hunch that it's something rather simple, and it's a communications problem rather than your receiver not working.
I sure hope I can help.
Do you by chance have another laptop you can set this up on and see if it's working on it?
BTW... are you using the AC to DC power adapter or a direct DC plug in?