try this :
1 uninstall the drivers
2 Plug in the phone
3 when the "found new hardware" popup comes up , give the path of the drivers.
If you already did this , then try using a different USB port
My computer crashed and I needed to do a recovery re-install of XP. Now I cannot get the USBNet or USBmodem devices to work. When I plug in the phone I get "problem installing hardware" messages. I installed the new 3.5 version of the drivers with a "clean and reinstall"
try this :
1 uninstall the drivers
2 Plug in the phone
3 when the "found new hardware" popup comes up , give the path of the drivers.
If you already did this , then try using a different USB port