Your error is likely get_query_var('paged')
should be get_query_var('page')
.
However…
You should avoid calling query_posts
in the template, it is a waste of resources, as you’re just discarding the original query which has already happened.
Hook pre_get_posts
to instead alter the query before it happens:
function wpa60728_pre_get_posts( $query ) {
if ( 'bvdirectory' == get_post_type() && is_main_query() )
$query->set( 'posts_per_page', 2 );
}
add_action( 'pre_get_posts', 'wpa60728_pre_get_posts' );