Had the same problem...
and solved it (twice - on two win xp pro computers) the following way.
1. start the install as the maual describes.
2. wait for the prompt to connect the device and do so - the computer will let you know there is an unknown device connected - do not panic.
3. follow the popup hardware install wizard - define where to find the driver - on the cd - a file called: wceusbsh.inf.
4. after the hardware is installed, follow through the installation process.
it worked for me twice, after having problems with it.
let me know whether it works...
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