Is Arduino Leonardo a product of Merchandable Quality?

It was original. Problem was a BlueTooth dongle. The ultra small, low power type that I bought from Adafruit. Possibly they are Bluetooth v4.0 dongles. Windows 7 was constantly rejecting that dongle and somehow dongle was interfering with Leo on the software driver level.

The moment I took dongle out, Leo started working flawlessly.

I now bought ADVENT ADE-C1EDR Bluetooth USB 2.0 dongle and that one isn't causing trouble.