The earlier car kits are not dual band and only work at 900MHz i.e. Vodafone and O2 only. They are not locked to any particular network and will also accept foreign SIMs as long as they are for 900MHz GSM networks.
I'm guessing that's the problem. I suspect the Vodafone SIM was a dud. Did it work in another (unlocked or Vodafone branded) phone?
PAYGO v Contract should not make a difference - it still uses the same radio network and protocols and is not distinguished by the radio network until the call details reach the billing system!
If you want to use the same number with more than one SIM (e.g. to us the same number for the car kit and another phone) then you probably will need to go on contract however, and it messes up voicemail and I believe also some other network services such as diverts.
In my early Motorola Startac 130 based kit (the original "flip" phone), an O2 PAYGO SIM worked fine (but Virgin didn't because it uses the T-Mobile network in the UK which generally operates at 1800MHz - never tried but it would probably work abroad where it would roam to some 900MHz networks).
I've now changed to a Parrot Bluetooth Kit which even matches the Jag blue/green illumination colour, because I got fed up with having 2 numbers and forgetting to divert - or at least my alternative driver did

. I've also gained some extra space in the centre cubby

.