How do I resolve the error message "USB Device Not Recognized"?

I solved a similar problem. My USB system had become very ill: although existing drivers would work fine, as soon as I moved any USB device to another port or installed a new device or tried, horror, to reinstall a device, Windows would refuse with "USB device not recognized". Within a couple of hours, my system was reachable by Remote Desktop only -- no USB at all worked.

The solution in my case was:

• To observe that C:\Windows\inf\ (= %SYSTEMROOT%\INF) did not contain usb.inf
• To head over to the thread http://answers.microsoft.com/en-us/windows/forum/windows_7-hardware/usb-device-not-recognized-in-windows-7/8106a712-a13e-4ca5-b82e-c3961cc254b1 to find out how to reinstall the missing files (most posts in this thread are of marginal interest)
• I used the variation: peruse C:\Windows\inf\setupapi.dev.log or its historical versions to figure out which C:\Windows\System32\DriverStore\FileRepository contains the original usb.inf:

In that previous version of the log, I looked for the string "usb.inf". This allowed me to figure out that it was originally copied into C:\Windows\inf from:

 C:\Windows\System32\DriverStore\FileRepository\usb.inf_amd64_neutral_153b489118ee37b8

This is of course system dependent. I copied both usb.inf and usb.pnf from there to C:\Windows\inf.

That's all it took in my case.

These are the options listed at Microsoft for the issue of USB ports made non-responsive by removing or connecting USB devices:

1: Use Device Manager to scan for hardware changes

2: Restart the computer

3: Disable and re-enable the USB controller.

Since rebooting every time you want to connect or disconnect a USB device seems like a lame solution, I'd probably try reinstalling the USB controllers:

First, disconnect all USB devices, even your USB mouse. Then:

1. Press "Ctrl + Esc" to open the Start Menu.
2. Type Device Manager in the Search bar and press "Enter". Click Continue if necessary.
3. In Device Manger, press Tab and use "Up" and "Down" to move the highlight to "Universal Serial Bus Controllers".
4. Press "Right" and expand it.
5. Press "Down" to move to the first item and press "Delete" to remove it.
6. Repeat the step 5 and uninstall all items under "Universal Serial Bus Controllers".
7. Reboot.

I would first suggest to compare in Device Manager the USB driver on both versions of Windows 7, the "bad" and the "clean". If they are not the same, this can explain the difference.

Secondly, I would suggest booting the "bad" version in Safe mode. If the problem now disappears, then the cause is some installed product. Use Autoruns to turn off stuff in bunches and rebooting until you find the guilty product.

[EDIT]

As you have said that Device Manager hangs forever, your computer really seems to be in a bad shape.

The only solution to avoid complete re-installation may be to refresh Windows by doing Startup Repair in Windows 7. This will only refresh Windows and leave alone all installed applications and their settings. You will need a Windows boot DVD of the same service-pack level as your installed system.

If your Windows installation is too messed-up so that Startup Repair fails, you will need to reinstall Windows from scratch, recommended with a reformat of the hard disk. So ensure you have backups of all your data, and installation media for all your products including serials. On some computers you receive a boot CD that allows you to restore the system to its state as when bought.