Xbee S1 transparent mode communication problem

Good morning all, I have recently bought two xbee series 1 modules as a way to learn the module, since I haven’t used them before. Anyway, I got one USB connector (USB-TTL converter) and am connecting the other xbee through an arduino UNO which I’m using as a USB-TTL converter (by pulling the reset to ground). Here are both of my modules in the xctu environment.

Ok, so now onto the problem. From what I’ve read, these modules are by default in a mode called “Transparent mode” which means that whatever I send to the input of one module (DIN) should simply be received at the output of the second module (DOUT). A simple way to test this should be to open up communication in XCTU and type something into the console. So that’s what I did.

I open up serial connections with both modules, and then type into the module connected to COM4.

Then I look at the module connected to COM7.

As it is evident by my awesome handwriting… Nothing gets received here. Both modules are currently in their default factory settings, so they should communicate with each other. Here’s a screenshot of the configuration of one, the other is exactly the same.

Alright, so I’ve been struggling with this since last night. Here is a list of things I’ve tried.
[ul][li]Switching the xbees around (the one on COM4, goes onto COM7 and vice versa)[/li][li]By shorting out the Rx-Tx lines and Tx-Rx lines from my arduino to the USB-TTL converter and then opening both ports in teraterm, I was able to communicate between them, meaning there is no problem in the actual circuitry.[/li][li]Tried restoring both xbees to factory settings.[/li][li]Tried giving both xbees a unique PANID, and then setting up destination addresses such that they are only able to communicate with each other.[/li][li]Tried updating firmware on both xbees (which was already the newest version, but I still did the update)[/li][li]Tried recovering both xbees with their firmware (XB24 - 802.15.4 - 10ef) which simple updated the firmware again[/li][li]Tried offering my soul to the devil in exchange for him to make the xbees work :p[/ul][/li]As of yet, I have had no success in making these two dinky things communicate with each other. I thought I’d pick you gent’s brains about this problem, and hopefully I’ll be able to find a solution.

Here is the configuration information on both the xbees (http://pastebin.com/Ec6ajQr5)

The XBee is not a 5V TTL level device. It is a 3V CMOS level device. You can’t connect the 3V XBee to a 5V TTL level shiftier without damaging the radio.