I switched the USB-RS232 converter but it still didn't work. I deleted the Config file and restarted. I tested using the DVDO Control Panel software and that didn't work as well.
In the Hardware Manager of Windows 7, it shows the USB-Serial Port as installed.
I will try and use a Windows PC to see if it is a virtual PC problem with Parallels.
Here is the Error Report - there is a line that says "System.UnauthorizedAccessException", I am not sure that the DVDO Duo is denying access. The full error report can be found here:
RS232_Error.rtf 7k .rtf file