Maxtor OneTouch4 USB not seen in My Computer

I'm working with a Compaq 6410nx pc running XP SP2. We purchased a 500gb Maxtor OneTouch4 external USB disk drives to backup the system. When we plug in the disk drive, we hear the tones associated with a new device being detected, but see no pop-ups that visually indicate that a new hardware has been detected. Upon looking in My Computer, there is no drive letter associated with the new device. When I look in Disk Manager, I can see the device and it is indicated that the device is active and healthy. Just no Drive letter assigned to it. If I go and assign a drive letter to it, it does appear to be available in the drop downs and the Maxtor backup progam can detect the device and run the backups, yet it is still not available under My Computer. If I reboot the machine, the assignment goes away and I am still sitting with a drive with an unassigned drive letter. We have taken this drive and plugged it into other machines and it is discovered immediatey and asigned an available drive letter and is visible in My Computer. I have plugged in a Digital camera and a 512mb flash drive and both were assigned drive letters and were visible under My Computer. I have removed all the USB hub and mass storage entries under the USB Controller section in Device Manager and let the USB sections rebuild themselves. When I try to add new hardware through the control panel, I get an error message though that indicates that another install is going on and I can't search while that is running. Getting frustrated at this point and would appreciate any advice you could give me. Thanks for you time and help.

Yeah, I think the error message is significant. The installation of the drive doesn't sound like it is completing.

You could try this:

Unplug the Maxtor USB Drive.

Click start -> run -> type cmd and press ENTER.

at the command prompt type the following two commands:
set devmgr_show_nonpresent_devices=1 and press ENTER
start devmgmt.msc and press ENTER

When device manager opens, click View, click Show Hidden Devices.

Now, expand the following two sections and delete any items that are grayed out. Disk Drives and Universal Serial Bus Controllers. Only delete the greyed out items. Reboot your computer and then plug in the Maxtor USB Drive again. Give it some time and see if it completes the installation and shows a drive letter. If it doesn't, see if the errror still occurs in add new hardware wizard.

OK, I tried that and got the same results. Any way to find out what is trying to install when I do the add hardware?