Have you tried changing the serial port?
I'm new to arduino. I just used my friend's duemilanove. When i installed the USB converter driver on my PC it gave two COM port. The "Communication Port" and "USB Serial Port". You can check it on device manager.
At first i was using the "Communication Port" which was COM1, and the result was the same as yours. But when i change it to "USB Serial Port" which was COM3 it worked.