This is likely a Service Pack 2 defect. I had never seen this message on my system, in years of usage with XP Pro, SP1. Today I wiped the system and did a clean install of XP Pro with SP2, and now most USB devices provoke a "USB device not recognized" message when plugged in. We're talking simple things like keyboard, mouse, thumbdrive.

It wasn't just one system, either. I encountered the same thing on a Mac Mini running Boot Camp.

So far an hour on the phone with Microsoft hasn't solved it. It's pretty clear that it's a major defect in SP2, but the question is how it has persisted this long and why aren't more people raising more hell.