After fighting with my old bluetooth dongle for a whole night I bought a new one. It arrived today, and I got it all setup and working with my palm tonight.
Windows XP make it pretty simple to set up networking across a bluetooth serial link, just add a bluetooth com port, and set up an incoming connection from that com port.
I was hoping that it may work in the living room, which is adjacent to the kitchen, but it seems that it is the Palm that is the problem, not the dongle.
Well, at least I can read the tech news at brekkie time without having to synch my palm:)