When I wish to resume I press power button and come straight into Windows screen.
However all hardware connected via USB is disconnected and in order to turn these items on I have to reboot the PC. These items include Card Reader, External Hard Drive and Belkin USB hub. My Logitech Laser mouse takes some time before to become operational
Carried out unticking all "allow the computer to turn off this device to save power" in USB Root Hub Properties boxes.
However removal of Windows XP Hotfix KB822603 couldn't be done as this is hidden by 'Microsoft Compression Client Pack 1.0 for Windows'. This has rolled up all the Fixes and one cannot see them individually in Add/Remove Programs.
Removing the Compression Pack might have undesireable effects on a host of devices.
What might be my next step? Would downloading SP XP3 fix the problem?
I can't say if downlaoding SP3 will fix your problem or not but I have done so on a couple of machines without a problem. It took some time though - probably a couple of hours all told. Haven't seen any major differences but nowadays I tend to use Vista much more than XP.
If you do decide to download SP3 I would do it from here click here and read all the things that you need to check before final installation.
Incidentally before you do so I presume you have tried the old trick of going into Device Manager and deleting all the USB entries then re-booting to allow Windows to rebuild the USB drivers. If you haven't already done so it is worth a try.