Of all the forums I have screened in researching this problem, this forum is the most up to date. After spending 5+ hours searching the internet, it seems that this problem has been around for about 4 1/2 years and Microsoft still hasn't addressed it.
The problem appeared on my computer last month (June 2009) after i tried to install a new TrekStor MP3 player. This was the 4th MP3 player i have installed over a 3 year period. Now none of my MP3 players will work on my main computer running XP SP3. However, they do work on a laptop running Windows 2000. This tells me it has to be an OS related problem.
Now today, the XP computer stopped recognizing flash drives and my digital camera.