I'm not sure if this is going to be of much help, but I had a similar experience with this computer.
I'm running Windows 98SE on one of my partitions and my son wanted to install the drivers for his Nomad machine so he could load some music onto it. Anyway, we loaded the software, connected the Nomad, Windows recognised it, so did the installed software, but when we tried to load the media it said the device was not connected!
After we had removed and re-loaded the software about five, maybe six times, all of a sudden it started working and I haven't a clue why.
The only thing I can suggest is to remove the software and re-load it again, it must be something to do with fickle USB's. Have a look in device manager to see if the computer is finding the device, at least if the machine is finding the device you're halfway there.