First of all , disable ALL power management inside ALL drivers of USB , firewire etcetera. Windows likes to power all things down , which makes them very very unstable.
Then , check in your usb drivers if the device still consume power (there's a % notifitcation somewhere). If it does , the device IS recognized by windows , but driver corruption may prevent it from working.
Then , remove all usb devices (physical) , then remove all usb device drivers (windows hardware) and reboot your system. Let windows recognize all device drivers and reboot again. Again, check the power consumption.
After that , make sure there are no firewalls and antivirus software running , they tend to capture the reading and writing processes of an operating system. If needed , reboot without having both active and check if it works.
Last : A device NEVER "just fails". There is always some 3rd party involved. This can be either a piece of software (update , program , driver , trojan , virus or automatic reconfiguration schedule) or a (malfunction of) hardware. Retrace your steps from the point where you are absolutely sure it was still running perfectly. If necessary , go back to another restore point in windows xp.