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I have been using the 3100 on my 1997 855 NA for a few years without problems (and I use it frequently...)
It is pretty forgiving about the order in which I turn on the ignition (or even start the engine), plug in the reader, and turn on the reader. A couple of times has shown "E" for error - when I had not plugged the reader all the way into the OBDII socket. My usual sequence is: turn on ignition, plug in reader, hit the link button and wait for the scan to be completed.
Perhaps you should try another reader, e.g. go to Autozone and have them try one of theirs. Just to be sure it's not something with your car's OBDII system/socket?
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'97 850 n/a Wagon, 145K mi
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