I had the same problem. It is caused by the recent Bluetooth stereo driver update distributed via Windows Update.
I have two working solutions. The first and better one ist to use System Restore to get to a point before the update. If this works you're ok. I had to try different points until I found a good working one.
The second way as a temporary fix is to click the BT Stereo Audio entry in the device manager or if not present the Unknown Device, Properties, Driver, Update Driver, Search on this Computer, Use a List on this computer, Audio & Video devices, and there the
old driver not the new 4.x one.
I am not sure of the wording above, it should be close but i do not have an english OS right now here.
After that and on reboot it will ask you again for a driver just click Don't install a driver now and everything should work fine.
The second method i a kludge because it will ask on reboots but it is just one click and better than nothing. That's why the system restore method is better. Of course don't install the Bluetooth Stereo Driver Update from Windows Update again until it gets
fixed or the same problem will reappear.
Greetings and good luck mine works again
This worked for me. I found that under my "Sound, Video and game controllers" in the Device Manger had a failed driver icon next to my "Bluetooth Peripheral Device". I used your instructions to install a new driver (or old one) and was given a list of of
2 choices... "Bluetooth Stereo Audio Version: 188.8.131.52 (7/10/2008)" and a "Bluetooth Stereo Audio Version: 184.108.40.206 (8/13/09)". I chose the Ver.220.127.116.11 and my BT headphones now work in Stereo again, and I no longer have the failed driver icon. I just
need to make sure I dont try to do the new update again. Thanks a million!