Hey XanderClark - Setup (unadopted) is expected in offline/local mode, since unadopted means not connected to Luxonis Hub. The device cannot be adopted into Hub while it is in offline/local mode.
The bigger problem is the disconnect itself. When you say it drops connection completely, do you mean all oakctl commands stop working, or just the app/Viewer? And does the device still respond to ping when that happens? Could you check that oakctl is updated to the latest version as well?
Thanks,
Oskar