I have just experienced the same problem with my printers working on USB ports but not my USB memory stick or card reader and I got exactly the same error message as yourself.
I phoned my computer manufacturer's helpdesk and they told me I would have to re-format my hard disk and re-install Windows XP which I did only to find that the problem still existed.
Someone on one of the newsgroups to which I am subscribed suggested not only closing down my computer but also switching it off at the mains socket. Seemingly this allows any residual current on the motherboard or any stray capacitance to discharge.
Believe it or not it worked! I now have all my USB ports and devices working as I want them.
Hope it works for you - it must be worth a try :-)
--
Vital Viking