OS X 10.6.6 presented as static image

OS X 10.6.6 presented as static image

I just installed latest PC onto ipad2, iOS4.3. When I connect I am presented with the desktop, but I cannot interact with it in any way.

If I change the desktop directly, the desktop presented via PC is unchanged, as if it is frozen image. 

I hope to get this resolved! The last wyse product I owned, a dumb terminal connected to a blazingly fast 1200 baud modem, 27 years ago, worked flawlessly. Had to write my own termcap, though. Man, do feel old.