Airdrop does not seem to work

I am having issues getting Airdrop to work. I have been unable to make this feature work at home, nor at work. The steps and symptoms are as follows:

1) On each machine, open a finder window, and select AirDrop. Two icons will appear in the window, representing the source and destination machine.

2) From my source machine, I drag a file (ANY file) to the destination machine. A dialog appears asking if I want to transfer the file.

3) Click yes to start transfer.

4) Immediately two dialogs appear on top of one another. The first indicates it is waiting for permission from the destination to receive the file. The second one that immediately pops up is a failure message.

Has anyone gotten this to work? I am running stock Apple Kit at home so far as network is concerned. We are talking Time Capsule, with nothing special done on the firewall.

The firewall shouldn't matter as Airdrop switches over to an adhoc networking mode point to point between machines when initiated.