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