are you using the "ehem" version of phoenix RC? if i'm not mistaken, phoenix RC uses a usb dongle(i think it came with the software package) to work with your transmitter. it won't work with cables.

ah..ok, so that's the problem. you need the usb dongle. there are some china made clones that can work, but i dunno where to get them.

the usb cable for your tx would work for most other sims, like realflight(may need an emulator) and aerofly.

yup that's the same cable i use on my esky tx to hook with aerofly and realflight. had to use an emulator for realflight though. remember you have to map the channels correctly. some simple steps:
1. make sure the tx is detected by your OS as a joystick
2. configure the sim software to map the channels you'll be using.
3. test until you're satisfied.

hmm....do you have those LED lipo batt checker(very useful) to check voltage per cell? or you could at least check with the shop to confirm what's wrong with the batt. any reputable shop would assist you on this.

if the shop tested it before selling to you, it's unlikely that the batt is faulty to begin with, and lipos - although unstable, doesn't really go faulty on the 1st few charge cycle. something else must be wrong in-between. how does the batt look(physically), is it bloated?

well it could be under/over charged at some point. i'm guessing a cell has failed (4.2v+4.2v+0.4v(failed cell)=8.8v). might wanna check that you charger is working correctly though. for the batt, bloated lipos are dead lipos. better throw away before it dies a flaming death.