Magic Trackpad won't work properly

In the bluetooth preferences my magic trackpad connects, but in the trackpad preferences it doesn't show up. What's going on?!
I can use basic mouselike functions with my trackpad, but since it won't show up in the trackpad preferences I can't use it do anything "magical". That renders it usesless. (I can use an old-fashioned mouse to do that)
I'm usig a new iMac (quad core) with system 10.6.8. In the trackpad preference it says "no trackpad found". If I restart the trackpad it can be found, but when I click "continue" it disconnects. Then I go back to the bluetooth preferences to see that it's still connected! Like I said, I can use the most basic functions, but only those basic functions. Very frustrating...
The batteries are good and I place the trackpad right under the computer monitor to avoid interferrence, etc. Is it possible there's a software glitch somewhere?!

I'm guessing that, if you don't know what USB Overdrive is, you probably have not installed it. It is not something that comes with your computer. Here is is a link for USB Overdrive:
http://www.usboverdrive.com/USBOverdrive/News.html
If you have USB Overdrive installed on your computer you will see it as and icon at the bottom of the "System Preferences" window. If you see it there, you can click on it to open its control window and delete it from there. But like I said, I'm thinking that's probably not your problem. Still, go take a look at the bottom of your system preferences just to make sure.
I'm wondering, though, if you installed any other software for a mouse, or other type of controller, maybe it would cause similar problems too. Maybe you should check for other things you may have installed (?).

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