This error has been becoming more frequent when installing USB devices on Windows XP after May of 2007. The following registry adjustments have been able to fix this error and allow your USB device to successfully install.

Click on the Start button and select "Run." In the dialog box, type in: REGEDIT
Press "OK."
This will bring up the Registry. On the left-hand browser window, locate " HKey_Local_Machine" and perform the following actions on all of the paths below.

Navigate to: HKey_Local_Machine\System\ControlSet001\ENUM\ :

1) Right Click and choose "Permissions."
2) Click "Add," then click "Advanced" on the new window, then click "Find Now."
3) Choose the "Everyone" User.
4) Hit "OK" above the "Everyone" User.
5) Hit "OK" again.
6) You should see "Everyone" highlighted in the top window. Check the box(es) to allow for read and full control.
7) Now click "Advanced."
8) Make Sure the two options under the "Add" button are checked.
9) Click "OK."
10) Click "Yes" on the Security Window.
11) Click "OK."
12) Click "OK" again. You should now be back to the registry editor.

Repeat these 12 actions on these listings as well:

HKey_Local_Machine\System\ControlSet001\Control\DeviceClasses\
HKey_Local_Machine\System\ControlSet001\Services\

Once you are done, restart the computer and complete the New Found Hardware Wizard by choosing the option to "Install the software automatically."