Currently (V0.8.4), the Sensel App does not support Bluetooth. The WiFi signal indicates that it can connect to our servers to receive notifications about available FW and SW updates. I can understand the confusion however and will make sure this is clear in the future. Future releases of the Sensel App will support bluetooth.
As for the Morph Not Connected issue, you can currently only connect to one device at a time using the Morph. Follow the directions at sensel.com/start under the Bluetooth dropdown to unpair your Morph from any existing devices and enter pairing mode.
Thank you for reporting the issues.