I'd recommend the following, if nothing else, just to have the latest version of stuff in general:
1: Go to the bottom of the first post in this thread:
http://render.otoy.com/forum/viewtopic.php?f=44&t=44044 and download the installer (when launched, it will present the option of which version to install, 1.2, 1.5, or 2.1).
2: If you have not done so, create a duplicate Daz Studio install. (If you have the installer, simply create a new installation in the directory of your choosing, otherwise, you can just copy the Daz Studio installation you are using now to another location). This insures (if creating a new install entirely) that you have a version of Daz studio that has really nothing external in it, and at least a functional backup if something goes horribly awry at some point in the future. You can have as many copies as you want (and if your hardware supports it (and you're really a masochist for dragging down your system's responsiveness) as many instances of Daz Studio running at once as desired).
3: Run the installer you downloaded in step one. If you wish to stick with version 1.2, install that one over your currently used Daz Studio install (you can browse for additional installations, should you wish to try all three versions without installing them over each other), otherwise, choose the 2.15 prerelease. It'll automatically bring up the activator when it finishes. When it's done, (personally, I would at least in one directory install 2.15, since it has the most current version of the liveDB, and should theoretically have the least issues connecting to things) Run Daz Studio again and see what you get.
I stress the trying the version 2 prerelease only because your current version is having issues, and that one is the most current. Again, you can have as many Daz Studio installations as you feel like copying, they all use the same AppData folder, and you can drag presets around if you do fresh installations, otherwise, they will be present in all copies. Once you have version 2 connected properly, try running version 1.2 (from the new installer that you downloaded in step 1) again. Most likely, it won't connect to the liveDb, but otherwise is functionally sound (which is basically where your current install is now, but the check mark will show green instead of red for activated). If it does manage to connect to liveDb, by all means, copy whatever materials you want from it (copy as new materials, and wait for them all to download, will take a while, depending on your internet connection) and make a backup of the LiveDbTextures Folder (should be in your %\Users\[your username]\OctaneRender\ folder, in case it fails to connect later (known issue with version 1's liveDb after installing version 2) If you do this, also insure that you turn off the autoupdate cache feature on the preferences tab, or you will delete everything in this folder (hence the backup is important, because at some point, you will likely do this). Version 2 has the same materials plus a few more, but sometimes (=almost always) version 1 doesn't like to read them, and vice versa.
If you choose to bypass the version 2 install and run into the same issue, just create another Daz Studio install and install OcDS version 2 and let it activate. For some reason, this made my 1.2 function again just fine with the aforementioned lack of liveDb more often than not. Once you get 1.2 reading as activated, you can delete the Daz Studio folder with OcDS version 2 installed if you want. Didn't cause me any issues to do so.