Won't recognize kinect?!

I just bought a kinect and Dance Central Spotlight for my daughter. When we try to start it up, it doesn't really seem to recognize the kinect. It says "Move your hand around to see the cursor" but nothing happens. The kinect works fine in other games so it has nothing to do with it not being calibrated/working. We can only move past the intro screen by using the controller after which the game merely says "Player lost" and is stuck. What to do here? Please help!
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