See if you have (or can download) a copy of the LMTOOLS utility from Macrovision (or whoever they are doing business as today). This utility has setup and configuration tools, and also a couple of diagnostic tabs that may help sort out what's going on with your installation. I'm running version 11.4.100 from 2007, and have no idea what the current release is.
I last set up FlexLM from scratch about 5 or 6 years ago, so can't give you the play-by-play. My installation is configured using Services rather than License File, so my render nodes can access their render licenses. If you're set up this way, you should be running a service named "FlexLM Eyeon License Server". (This runs the lmgrd.exe binary.) You should also have an eyeon.exe binary and dfusion.dat in the install directory of FlexLM. The environment variable EYEON_LICENSE_FILE should have value similar to "@192.168.0.1;" (without the quotes) where the network address is where you are running the license server.
If you've configured your installation for License File rather than Services, all of the above may be different.
Added in edit: Oh, the other thing that comes to mind is double-checking that your system is actually recognizing the security dongle. Check in the Device Manager that it shows up as a USB device with proper drivers, and that it appears under Devices & Printers (probably as a HASP or USB UltraPro device). From your original description of the problem, I don't think this is the cause, but it's been a pain point for me in the past. Once you get a set of drivers that actually work for the dongle, don't upgrade.
