Unfortunately, Auto Discovery is not capable of scanning the network and discovering your Insteon devices without user intervention. This is by design in the Insteon protocol and a limitation of Insteon and not PowerHome. The thinking behind this decision was to keep your neighbors from discovering your device ID's and controlling your lights. It doesnt make sense really since you could leave PowerHome in Auto Discovery mode and you'll be able to register devices anytime your neighbors go to perform any manual linking.
Anyways, the only way for the PLC to "see" an Insteon device address is to place the PLC in discovery mode and then send an "Enter Linking Mode" command from a remote switch.
You should be able to use the Auto Discovery mode to determine the address of the switches without having to remove the wall plate covers. That's more or less its purpose since I didnt write down my addresses when installing and didnt feel like popping the covers off of all my switches.
Once PowerHome is aware of the devices within your network (through auto discovery or manual entry), it will discover all existing links between devices with no further user interaction. You can then edit, delete, or create new links just through the software.
Mike, if you've got firmware version 2.12, then you should be good to go. Sounds as if they didnt change the sticker.
Digger, if you're still having problems, let me know. The auto discovery is useful also for determining communication issues. If PowerHome doesnt hear the switch during auto discovery, then communications are probably borderline and link discovery will probably have problems as well. Repositioning the PLC may help. Ive had some users report that they have to plug the PLC into a different outlet than their computer is plugged into and that clears up any communication issues.
Dave.