Arduino mini + Bluesmirf programming

We just got the arduino mini hooked up and working with a bluesmirf gold BT dongle. The code seems to work fine at 57600 (note: mini doesn’t seem to work 115200 for some reason - anyone else experience this?). However, programming it through bluetooth through the Arduino IDE seems to fail every time - we can see it connecting to the BT serial port, but then it disconnects quickly, and the IDE returns after a while with the error “port is busy”.

In the IDE we selected “Arduino Pro/Mini 8Mhz”, which works fine when using a USB-Serial adapter.

Any suggestions?

Thanks in advance,

Johnty