I don't have a Kinect yet, but I have used one at a friend's house several times. While it's not perfect, I'm satisfied enough to want one, ha ha!! It's definitely better than the sensor that comes with the Wii.
I played with my own and works fine, played at my friends' house and also works OK. If re-installing the thing doesn't work try contacting the warranty people and maybe change it if possible. It should be working, I had no problems up until now.