My guess is your application only works in ad-hoc mode. I know next to nothing about smart-phones but apparently most of the tether applications are ad-hoc only, and you need to root them to install a proper one.
See http://forum.xda-developers.com/showthread.php?t=1140405 for more information (I guess).
See http://forum.xda-developers.com/showthread.php?t=1140405 for more information (I guess).