Hi, Coyote!
Yeah, I have run into problems with soft bone. I tried three samples on one skeleton and got nothing. But one just about 500 years older had a nice tooth, and the lab got mtDNA on the first try.
The Hobbits are more than twice as old as the ones I had, which makes it much more difficult, but there are a few labs now that are having pretty good success with those older samples.
And they sequenced a couple of Neanderthals, so I think its just a matter of time before they are successful with a Hobbit tooth.
The specimens are not fossilized, but were described in a Nature news article as having "the consistency of wet blotting paper" (once exposed, the bones had to be left to dry before they could be dug up). Researchers hope to find preserved mitochondrial DNA to compare with samples from similarly unfossilised specimens of Homo neanderthalensis and H. sapiens. It is unlikely that useful DNA specimens exist in the available sample, as DNA degrades rapidly in warm tropical environments, sometimes in as little as a few dozen years. Also, contamination from the surrounding environment seems highly possible given the moist environment in which the specimens were found.