Arduino + Bluetooth

Just got my Arduino Pro Mini 3.3V 328 and RN-41 DIP breakout bluetooth module yesterday.
Using a 3.7 V Li-poly battery.

Problem: Connected RX from bluetooth to TX on Arduino and TX to RX. And connected ground and 3.3 V from bluetooth to GND and VCC on the short side of the Arduino. The battery is connect to RAW and GND on the longer side of the Arduino.
Everything powers up. The green led blinks once when I flip the switch, and then the red power led stays lit.
The RN-41 shows up on my Windows 7 pc, and I can connect to it through Putty and enter command mode.
However, I can't upload a sketch to the Arduino. The COM port is right, the BAUD rates match. I hit the reset button right before I try to upload the sketch, but I keep getting this error:
avrdude: stk500_getsync(): not in sync: resp=0X00
avrdude: stk500_disable(): protocol error, expect=0X14, resp=0X51

Google search hasn't helped except to alert me that many other people have had this type of problem. The board comes pre-loaded with the boot-loader. I'm starting to think it isn't possible to upload a sketch simply over a Bluetooth serial connection. Prove me wrong. On the longer side of the board there is another set of TX and RX pins. Should I use these? Any help would be greatly appreciated. I've heard success stories about people uploading sketched over Bluetooth without a physical serial connection. Is this possible? And what are the steps to make this work. Thanks.

Any ideas?

You seem to have connection problem's , Because some how the IDE is not getting what it's expecting (like the chips signature is different) try checking all the connection's at the first point.