Hi Tom,
the USB port is just for USB sticks with music on unless you spend around £150 for an Ipod connector thing, I saw one for sale down at Lipscomb dealership.
The waiting for connection means that your not connecting to the bluetooth.
First things first, you need to clear all user data in the menu, look in the blue and me handbook for the menu structure.
Also check that you phone is compatiable, you will need to then start pairing the phone (user paring in the menu), it will say searching for connection, and you will need to find it in your bluetooth on your phone and then type the pairing number when asked.
Depending on phone it will then copy all your numbers across.
As a general rule if your pressing the phone button and its searching for connection you phone is not connected, what I find with my phone is that it works best if the bluetooth on the phone is switched on before you start the car up.