Everything appears to be set up correctly with the widgets and IO-204. The X10 board just isn't responding. If you send it back, back we'll replace it.
Two last thing to check. Are you using the white cable that came with the X10 Smart Board? I know it looks like a telephone cord but the wiring is slightly different. A few people have used telephone cords in the past and it caused problems. And finally... remove the X10 Board and looks closely at the pins. The one other time this happen it was because a little glob of soldering flux got one of the pins, preventing it from making contact. After the glob was scrapped off, it worked again.