I struggled with a couple of things setting up the HC-05 bluetooth, so I've written a post with circuit diagram and some code:
http://jimsrobot.com/bluetooth-hc-05-breakout-for-arduino-or-picaxe/
Despite other information around, it's actually easier to get into the AT commands using a small circuit and software instead of using a reset button. And you don't need an external serial port monitor as the Arduino will setup the Bluetooth and also monitor the serial. This circuit was done with the Leonardo.
Hope this helps.
