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You should be able to run the BTS software without any hardware connected to your system. The GUI should appear and then declare it can't find any hardware. So, I'd suggest, it's not relevant whether your JTAG server is running or not. Windows 7 isn't happy with something at a more basic level. A bit of a long shot (perhaps) but have you tried repairing you Windows 7 installation?
Cheers,
Alex
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I have the same issue. I have recently bought a start up kit with a MAX V CPLD and went exactly through the same process. First installed the latest version of Quartus II web edition and the latest kit which is for version 11.1. It is said in the documentation that Quartus II version 11.1 and greater should work with the kit but indeed the test program doesn't work at all (nothing happens) if one doesn't install the version 11.1. Finally, I made it work but the test program can not see the USB-Blaster. I can run the BTS without hardware but I only have an option for a Ethernet based device. Essentially the USB-Blaster seems to remain undetected even if the driver seems to be installed correctly. I looked and there seems to be a 64-bit as well as a 32-bit version of the driver. There are no warning about driver issues on my laptop. I'm also using Windows 7 64-bit. In my case I don't have the option of trying on a 32-bit Windows. Actually, this is for me pretty catastrophic as my laptop with the current configuration is what has been issued at work for me! I'm pretty sure that my Windows installation is not broken or something like that! Any Altera gurus could suggest a solution? Thanks a lot!