HELP!

This Crapaq is beating me. I am working on a friends Compaq 1235 notebook with a OPTi 82C861 USB chip. Running 98SE, in device manager, it show [Code2] NTKERN.VXD is unable to initialize the device. I have done everything I can think of, from upgrading from 98 to 98SE, removing the device and reinstalling it, to looking for an upgraded driver for the device.
Any ideas????