Hello,
Following are the most common problems when troubleshooting "No Rabbit Processor Found" errors WITH USB.
First, Dynamic C is compatible with Windows 7. However, a known problem is to install DC without having the hardware attached and powered up. The wrong FTDI drivers get installed. Uninstall DC, attach and power up the board, and reinstall DC.
Second, there is a known issue of incompatibility with Dynamic C and some of the USB hubs on the market. Try removing the hub and re-compile your code.
Third, many (perhaps most) brands of USB to serial converter cables do not support DSR and DTR, which signals are required by Dynamic C to monitor Rabbit's STATUS output and control Rabbit's RESET input, respectively. We recommend using either Digi's Rabbit-brand USB programming cable or the USB to serial converter that is sold by Digi (part # 20-151-0178).
Fourth, it was discovered that in Device Manager, in the USB COM port’s “Advanced Settings” dialog box there is a “Latency Timer (msec)” selection drop-list. It was found that reducing the latency setting from the (apparent) default of 16 msec to a much smaller value (1 or 2 or 3 msec) resulted in much better performance and problems with frequent target communication errors. Experiment a little and use the highest latency setting that doesn’t cause frequent TC errors.
Try swapping out different hardware (BL2600, programming cable, etc) to see if you can narrow down the issue.