I'm guessing your 2.5mm to 3.5mm adapter is bunk. Either that or it doesn't want to play right with the HTC cabling.
Buy this. It's nice and small, and it offers not only a standard 3.5mm plug (and yes, I've plugged in headsets into it and it outputs stereo), but your standard USB plug too.
Works great on the Mogul, and you can't go wrong with the price.
http://www.semsons.com/2miusband3st.html