I have the same problem, also win 7 64bit, tried a couple of different things, nothing worked, but I ripped my finger open on that plastic cover, because I thought the USB Caple is the problem. I can use the rift as a display with no headtracking whatsoever, instant headache ! Will leave it stored away till their is a fix, exams are around the corner and I don't want to drive myself mad.
I might have found something out:
If I hold down the powe button for a few seconds, the LED turn blue and the config utility recognizes the rift. However after a few seconds it goes back to the old error message and windows plays its "device disconnected" sound.
I FOUND A FIX... FOR BOTH OF MY DK2'S......
used a different hmdi cable bypassing the built in one (tried on both rifts). 100% success. what the hell?