Reply to VCI-100 1.3 - Jog wheels don't scratch

I have a VCI-100 SE that is still using the 1.3 firmware. I'm using the latest mapping, v3.6.3. I bought it used and used it for 4-5 days without flaw. This morning a problem developed.

When my controller is on a flat surface, the jog wheels don't scratch. Well, they can, it just takes a handful of tries and the right finger positioning to get it to. When I touch the black part of the wheel, it doesn't light up red and it doesn't scratch.
Whenever I use the wheels, whether scratch is on or not, it only does pitch-bend. When using the wheels in conjunction with the slice and echo buttons, the wheels light up red and work as they're supposed to.

I tried restarting my computer, Traktor and the controller. I tried reimporting the mapping. I tried adjusting the sensitivity knobs on the back of the controller. None of that helped. I started trying the controller on different surfaces and ran into a peculiar observation:

The jog wheels work perfectly, as they should and as they were, but only when the controller is sitting on my lap!

Can anyone offer my any advice on how to fix this problem? I'm not terribly keen on only being able to use my controller sitting down with it in my lap. :P


EDIT: And for what it's worth, I'm running Traktor Pro 1.2.4 on a Macbook running OS X 10.5.8.