Thanks JimisBell for all the help you have given me late last night.
I got into chat with MJ folks this evening. Now MJ is running on my TC. It took easily 4-5 hours before the problem is solved. I will give sequence of steps how it was done for your benefit and others on board.
When I started this eve. MJ on TC stuck with error 401 Msg says to restart MJ using Menu - Advanced users- Restart. I tried a few times . It did not work.
Got into chat. The technician moved me to another computer ( a desktop) where MJ always works with a Ready to Call. Clicking on MJ Upgrade icon on my screen, Mj stopped working with the same error 401 msg I got on TC. We struggled for some time. Now I have TC and desktop with same error 401.
A higher level technician ( Kenney) took over - wanted me to change lots of setting in the Norton firewalls. It became too complicated for both of us to communicate. We gave up on that. Finally he suggested that I should FORMAT both MJ drives on the desktop. I had E: drive and F: ( vista only drive). There is no option to format E drive. So I formatted F drive. He gave me a link to upgrade MJ sw ( which can handle both XP and Vista). After upgrading, and replugging MJ I got Ready to Call. Now Desktop problem which was created during chat is now fixed .
Now on TC:
I plugged MJ on TC which gave me the same 401 error msg. He suggested I should FORMAT the E drive ( vista only) and Run MJ upgrade sw. I did . I got Ready to call on TC. I made in/out calls. It worked.
Two crucial steps: 1 Format Vista only drive , upgrade MJ sw ( XP/Vista) .
The upgrade link looks like this I am not 100% sure.
http://upgrades.magicjack.com/upgrade/upgrade.exe.
My suggestio to you is: Reformat your vista only drive and upgrade with MJ sw and see your problem go away.
I am glad the problem we had is not due to any limitation with XPe. During these chats MJ folks would have done something ( change in settings) in their end also.
Good luck