I authorized a small gummy bear on such, so its pretty clear to me that even when it works, it can't tell if that's a finger or some oddball object.
The good news is that its likely to be under warranty and Microsoft has done ok in exchanging dead units.
Bob
I've had my Microsoft Fingerprint Reader a couple of weeks and I can put any of my scanned fingers on it and it will not read them. If I put my finger on it a dozen times, maybe, just maybe, it will read one. I have cleaned the surface of it, and deleted and rescanned my fingers. Usually it is much less time consuming to just type in my password. I understand you have to place your finger just so on the reader, but how many different ways are there to put your finger?!!! I am so dissapointed in this item. Can anyone help. I thought it was going to be a great help, but no! Thanks, Friends.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic