When I open up the America On Line dialer and try to connect, AOL responds with a message 'AOL cannot initialize the modem' and the modem will not dial out.

AOL 7.0 and AOL 8.0. Apparently someone at AOL mistyped the init strings inside the modems.dat file, and it affects the MT5634ZBA-USB. The procedure to fix the problem is:

Open the directory of AOL 7.0 or 8.0. For example, the default directory is: C:\Program Files\America Online 7.0\
When inside the AOL directory, go to the Modems directory. Once inside there will be two files to modify.

Modems.dat
Mdmcstm.dat

Right click on the Mdmcstm.dat and select open with Notepad. Once the file is open, locate the string 'Setup=^MAT ..... '. Remove the ^M so that only 'Setup=AT' remains . Once completed, close the file and save it.

Right click on the modems.dat and select open with Notepad, at this point Windows will indicate Wordpad is needed. Once the file is open, click on the binocular icon and do a search for MT5634ZBA-USB . Once found, edit the line right below the MT5634ZBA-USB line. Again, it will begin with 'Setup=^MAT... '. Remove the ^M so that only 'Setup=AT' remains . Once completed, close the file and save it.

You should now be able to dial into AOL.