Now, I cannot guarantee this as I am not the developer of the hardware we're talking about. But I went over the diagram of that adapter, as well as the howto of version 1 of Phil's adapter, as well as the protocol of the Select Monitor. From this, I conclude the following:
It seems to me that the only reason we have the +12V from the car connected to our circuits is to power the circuit itself. Since your adapter is adequately powered from the +5V of the USB, you do not have this problem. Which also means you are probably not succeptable to the pitfalls of early SVXs. Too bad you don't own one!
Therefore, the only wires you need connect to the ECU are the Tx, Rx and ground, as you have already done.
Since you appear to have the hardware properly configured, I conclude that your software is improperly configured. In the SelectMonitor folder, open SelectMonitor.ini with notepad. There is a value which reads (on mine, since I have changed it):
CommPort=12
Make sure that the number there matches the number of the COM port you are using. My USB-to-Serial adapter registers itself as COM12, so I put a 12 into that field.
Hopefully that's all it is.
By the way, are you xStream over on the VWRX forums? Those forums look dead, I think the author of the program has gone into hiding or something.