As a security precaution, Microsoft’s SP2 prevents Bluetooth devices from working until they are configured.
Bluetooth’s magic is that Bluetooth-enabled systems simply detect the keyboard, mouse, or random device and allow it to start working on the system.
As great as this is, it is obviously a security problem. In theory, prior to SP2, Bluetooth devices could be programmed to connect to a Bluetooth system and to try to exploit that system.
Now, with SP2, Bluetooth systems must be configured before Windows will detect them.
The difficulty is the transition. Many people use Bluetooth keyboards/mice. These will not be detected either during or after the SP2 upgrade is complete.
The only workaround for this is to whip out an old standard mouse and keyboard until you can configure your Bluetooth device after the SP2 install.