Play and Charge Kit Issues

I bought a play and charge kit around boxing day, and I'm having issues with it now.

The rechargeable battery that came with it seems to be stuck on 'almost empty'. Anytime I go to use the controller wirelessly, the xbox button thing on the controller flashes to indicate I have low battery, and hitting the button shows the battery as having only one bar left.

If I go ahead and plug the battery in with the play and charge kit, the low battery indicator stops, but I don't see the red 'charging' light (or a green light, for that matter). And with it plugged in I can use the controller without issue, but it won't charge. So its basically turned my once-wireless controller into a wired one when using the rechargeable battery.

Has anyone else had this issue? Or know a possible fix? Or am I basically screwed, and need to go buy a new kit.

Thanks