Have you tried using the "Open" DTK?
I was having some trouble connecting to a 7.x machine, similar to what you are seeing here, but the Open DTK worked fine:
Now I am seeing something similar as well.
I ended up forcing it to run as administrator and can get It to start and can connect once.
If I try and disconnect/reconnect that is when i see issues.
I will bring this up with the developer and see if there is anything that could be causing this to fail.
also, there were times when the app reported the service was running, when it really wasn't.
Can you verify that the service is running when you attempt to connect?