With PdaNet connected, try to make sure you are able to browse the web on the phone's browser. If not that means either you do not have data connection on your phone or you have to disable "Mobile Broadband" or any other built-in tethering feature on the phone.
If phone's browser still works, then the issue comes from the computer side. On the computer click on Start->Programs->PdaNet for Android and select "Install Legacy Network Driver", wait for it to complete and see if that fixes the issue.
This indicates you have previously installed another "Android related software" on your computer which
put an always-running "adb.exe" process on your Windows system. This process will monitor and take over your USB connection to an Android
phone. As a result it may interfere with PdaNet's USB connection.
To avoid the conflicts, on Windows search for file "adb.exe" under folder
"c:\program files(x86)". Once you find the file, rename it to something else then reboot your computer. After that "adb.exe" will no longer
run and that allows PdaNet to connect normally.
Try to uninstall PdaNet on Mac first (run ~/PdaNetUninstall.sh), then reboot your computer and reinstall PdaNet Desktop client (and reboot). This time make sure you have chosen the Boot Driver during installation of PdaNet. This should fix the issue.
If you start getting this error after you changed to a different Android phone, that means you need to reinstall the USB Driver. To do that, download and install PdaNet again on your computer, and select "Yes" when it prompts you to reinstall the USB driver.
You can also trouble shoot the USB driver issue with information in this page.
This error usually indicates a USB hardware or driver problem, such as the USB port or USB cable not providing enough power. Try to see if any of these helps: try to reboot your computer and plugin a different USB port; make sure your laptop is being charged; make sure you are using the USB cable that comes with your phone instead of a third party cable.
Sometimes the issue is caused by the phone dropping the USB debugging interface. You can verify this by opening Device Manager on the computer and see if the "ADB Interface" device is no longer listed.
If you have a HTC or Motorola phone, you can also try to see if an older Google USB driver works: on the computer go to Start->Programs->PdaNet and select "Install Legacy USB driver" then wait for it to tell you it is completed. Reconnect and see if it helps.