Windows 7 doesn't recognize USB devices anymore
USBDeview will give you a view of what is going on.
"USBDeview is a small utility that lists all USB devices that are currently connected to your computer, as well as all USB devices that you previously used. For each USB device, extended information is displayed: Device name/description, device type, serial number (for mass storage devices), the date/time that device was added, VendorID, ProductID, and more...USBDeview also allows you to uninstall USB devices that you previously used, disconnect USB devices that are currently connected to your computer, as well as to disable and enable USB devices. You can also use USBDeview on a remote computer, as long as you login to that computer with admin user."
Things I've tried in the past in similar situations that worked:
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Run USB Oblivion with the Do real clean checkbox checked, then rebooted:
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Deleted all USB root hubs and controllers from Device Manager, then rebooted. This is best done with a PS/2 mouse/keyboard connected, since obviously USB devices will stop working.
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Completely unplugged PC and removed the CMOS battery. Inserted battery after 10-15 mins., powered on, set BIOS options (that have all reverted to defaults) as required, then booted into Windows.
Update on my problem, I didnt solve the USB problem but my guess was that it was a hardware issue since I basically ruled out all software issues. However, last week, my PC stopped working completely so maybe the USB problem was just the start of the end, and since I was planning in getting some new hardware anyway...thats what I will do.