Welcome to the PICAXE Forum.
What you describe is more commonly referred to as a Hard Reset procedure. When the PICAXE is busy, waiting for input, sleeping, and so on, it can miss the download activation from the programming software.
Normally this will manifest itself as a "hardware not found" error because nothing is seen from the PICAXE, but where a PICAXE may be sending data to a Terminal, using DEBUG, even toggling I/O lines, it can be that this is mistaken as a download acknowledgement, but that then never completes.
Turning the PICAXE off, initiating the download, and then powering up the PICAXE should cause it to always see the download initiation and respond to it as expected. As appears to be the case here and we are glad to hear you solved your problem.