Hello Joseph,
Please clarify what you mean by "VBUS2 is supplied with 5v via regulator on the device"
Do you have VBUS2 connected to a 5V power supply and Vdd2 is generated by the internal regulator?
Start by checking the power connections. The part does not supply isolated power across the barrier, so a supply is required for each side. An additional dc/dc converter is required for that.
Please verify that the pull-up is being applied by the peripheral controller.
Can you remove the isolator and connect the peripheral to the laptop and get it to work?
Let me know what you find out.
MSCantrell