Found this in my tech notes......
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Google Answers: windows XP pro: drive-letter assignment when plugging a USB device broken
If the symptoms are the same in the limited startup, try this routine to completely remove any PnP drivers for the USB storage device:
Click Start-> Run-> CMD <Enter>
Type the following lines precisely as a typographical error will not produce an error message (CAPS for emphasis only):
SET DEVMGR_SHOW_NONPRESENT_DEVICES=1 <Enter>
Start Devmgmt.msc <Enter>
From the Device Manager console that opens, choose View/Show Hidden devices.
Now go down to your USB section, expand it, and see if you can locate any 'ghost' icons. These would be drivers that are installed, but not presently in use. You want to focus on these, if any are found, and remove them (uninstall), along with any USB Mass Storage Device items (that should be the list item for the flash drive).
Additionally, you'll want to look under the Disk Drives section for any presence there as well.
Now reboot and remove the drive before Windows loads.
I have had this happen and have always solved the problem by removing all USB drivers from Device Manager, rebooting and letting them reinstall.
1. Go into Device Manager and expand the "Universal Serial Bus Controllers" group.
2. Uninstall every device listed under this group (right click on device, left click uninstall)
3. Be sure all USB devices are unplugged!! *THIS IS KEY*
4. Restart Computer
5. Upon restart the computer will recognize all the devices and install them.
6. Plug in a device and see if it works.
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