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I had the same problem recently - out of the blue, with nothing changing on my PC, ActiveSync would "ding", "connect", do the "green spin" for eternity, and would finally terminate with a little red exclamation point on the AS Logo and the vague proclamation of a "Connection Error". I tried everything - upgraded to AS 4.2, scanned for spyware, disabled AV software, disabled firewalls, stepped through the Microsoft Troubleshooters, and scanned these forums intently looking for guidance. Nothing worked. The one thing I did find, however, was that I did not have any of the logs that Active Sync supposedly creates (wcescomm.log, for example).
Fortunately, I was planning on reformatting my PC and upgrading my AXIM to A12 anyways. Once I did that, everything worked perfectly - and ActiveSync literally flies now!
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