Sometimes while using your USB camera and USB memory stick, your Windows XP SP2 PC may suddenly give you the error message: 'USB Device Malfunctioned' and ask you to disconnect and plug it in again. However, this fix doesn't always work.
Try this solution instead. In Device Manager, expand Universal Serial Bus Controllers and right-click the first 'USB Root Hub' and select 'Properties.' On the 'Advanced' tab, unselect 'Allow computer to disable this to save power.' Repeat for all USB hubs.


Do you ever get the "USB device malfunction" message on your fully-patched Windows XP SP2 box? Sometimes, the 'Unknown Device' error still reappears under the "Universal Serial Bus controllers" category even after you've tried disabling the system as I suggested in my previous tip (See part 1 of this tip).
This is when it's time to use Registry Editor. You will need to use the modern Registry Editor, regedt32.exe, because you must give yourself rights to delete a key. (The usual caveats apply -- if you make a mistake, serious consequences may arise.)

1. In regedt32 go to: HKEY_LOCAL_MACHINE\System\CCS\Enum\USB.
2. Look in each folder labeled Vid_Xxxx. There should be subfolders containing information about one of your USB devices in each.
3. Right click on the Vid_Xxxx folder that contains a folder labeled 'Unknown Device' in it and click Properties.
4. Check Allow Full Control, then right click on the same Vid_Xxxx folder and delete it.
5. Reboot and plug the device in.

http://searchwincomputing.techtarget.com/tip/0,289483,sid68_gci1059071,00.html

This should have been posted in help section, thread moved