T-man, when you removed all the USB entries in Device Manager, did you show hidden devices first?
If not, try this, often helps:
Unplug all USB devices.
Open a command prompt, enter <font color=red>set devmgr_show_nonpresent_devices=1</font>
Open Device Manager, click on View then Show hidden devices. Scroll down to USB and click on the plus to expand it. Uninstall them one at a time. Shutdown and reboot, let XP rediscover everything and load necessary drivers. This can take a few minutes, be patient.
Now try the USB device, see what happens.
You can also try this tool USBDview
, gives you all kinds of info about your USB devices. Check the View and Options menus too.
You could also try a PCI USB 2.0 card, see if that works. Perhaps borrow one to try and if that resolves the problem buy one?
Also worth trying a System Restore to before the problem occurred and as a last resort, do a Repair Install