This worked for me! After MONTHS of searching... It was so simple. I hope it works for you!
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Tethering Error Gone!!! - Samsung Captivate
Re: Tethering Error Gone!!!
? Reply #10 on: April 06, 2012, 03:54:21 PM ?
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Just found this non-reset method to fix the tethering issues. Don't know if it works, but I'm giving it a shot.
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Many people have been receiving a Tethering Error Pop Up message on their Samsung Captivate mobile devices after updating to the 2.3 Gingerbread. I myself have been having this problem every time I unplug my device from a charge.
Here is how I fixed the problem without having to do a factory reset.
Plug the device into your computer (I'm using a laptop running on Windows 7 64-bit) via micro usb cable, next you will see "select USB mode"
don't select any option, instead hit the back button which will take you to your Home Screen
Now select settings --> wireless and network --> tethering and portable hot spots --> check USB tethering.
Now wait for Windows to install the device driver Samsung Android USB NDIS Network Device. Once the drivers are installed just disconnect your device from the computer. That's it, problem should be solved and no factory reset required.
Hopefully this will work for you too, please let me know how or if it works for you.
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Hope it works.
Mark in Brea