Ok, I will tell you what to do, but the call to do it is yours. No responsibility on my side WHATSOEVER, even though nothing will really happen!
The problem in my case was that software needed to get upgraded and most likely it's the same for you.
So how you do it?
Macintosh a.k.a. Mac :) - you may need to switch to a Windows PC to do this. I did it with Mac and for some reason things didn't work properly and then reformatted it with Windows machine. So basically, we need to reformat the little drive within the magicJack. If it works well and you erase the data and re-format that little drive as MS DOS - FAT16 then you are fine with Mac, otherwise just switch to Windows and we'll do it there.
The pic here is Mac -> Utilities -> Disk Utility.
Windows - Plug magicJack.
Open My Computer and find magicJack and accompanying disk that says removable disk. In my case they were G and H drives. G - had a phone icon, but we are focusing on the H drive - removable disk. Right click on it and select FORMAT option. No fear, just relax. Make sure the size is 17.7 Mb. That way you will know you are not formating your important drives.
So leave all default and make sure the format is MS DOS FAT and the name is PHONE. Once again, the size of the disk will be 17.7Mb.
After you reformat the drive unplug the magicJack and wait for 15 secs.
Test the Internet connection and make sure it works.
Plug the magicJack back in and wait for software to be downloaded. You should be fine at this point. The light on the screen should be green and magicJack should be downloading the software. DO NOT UNPLUG NOW!
It will finish automatically and also will ask you for your username and password. Once you type it in your magicJack will be unlocked and working properly.
