This is an old thread but I'll post this anyway, in case this helps anyone.
I had 2 calls on the same day with this Error 692 in Windows XP. One user had a Lucent Winmodem, the other had a Conexant HCF Modem. Both were getting error 692 and both were using Callwave.
We uninstalled and reinstalled the modem drivers for both and they worked fine after that. It may just be a coincedence that both had Callwave installed though.