About the only thing I could think of is that there is some problem with the USB drivers on your system preventing the drive from being properly detected by Windows. However, if you can see the drive in windows and explorer and browse a disc in it, then the USB drivers are working correctly. It also means your drive is working correctly. So this is some kind of software problem. Unfortunately, I have run out of ideas at this point
I do not know for sure if SP2 will help. I don't have the 5169D myself so I cannot check to see if using only SP1 is a problem. Since it is the only thing left to try, why not just install SP2 and see if it fixes the problem?