I isolated the problem:
on my laptop I was running a registered copy of GameStudio. On the PC, I was trying to compile the same using Lite-C. Today I downloaded the GS trial and the wiimote sprang to life like clockwork!
I even uninstalled my copy of Lite-C, downloaded and reinstalled. It comes with the latest ackwii plugins and everything seems to be in order. Sure enough, the wiimote won't pair even though there is clearly a bluetooth connection established.

P.S. Here is the list of compatible bluetooth devices:
Wiimote compatible Bluetooth devices @ Wii Homebrew