I am having the exact same issue. This is after about a year of not using either the Variax or PODxt. I updated most of the software/drivers through monkey, which makes me wonder if it is a software issue.
Variax works fine.
PODxt Live works fine.
Plug the variax in with VDI and the Pod freezes. I can't change anything. The Variax will still change voicings.
Keep the Variax plugged with VDI and reboot the POD....the POD won't even boot up properly, it freezes on the Line 6 logo page.
I unplug the VDI, Pod finishes booting up. I am able to change settings and programs.
Plug into USB Variax interface, the guitar side just flashes red and neither Workbench nor Monkey will recognize the guitar.