Question : Problem: Only one USB port - Error Message: USB Device Not Recognized

This laptop is a Dell Inspiron 6400 with 4 USB ports in all.
Recently, most notably, after I upgraded the drivers listed in the Dell site, one of my USB ports started giving this "device unrecognized errors". It comes for flash drives whereas the USB mouse doesn't even elicit that response too. It just doesn't give even a beep sound for device plugging.
But, the mouse gets powered on (from the laser light-optical mouse). I have tried uninstalling USB hubs and controllers from both normal and safe mode. restored BIOS settings to default.
Both the mouse and the flash drives work on rest 3 ports without any problem. Also, the faulty port was the most used, until now.
I want to explore all options before considering the BIG fresh install as I have a heavily customized OS (Win XP Sp2 with all latest updates).

Answer : Problem: Only one USB port - Error Message: USB Device Not Recognized

First, determine if its a hardware or software problem.  Download a bootable Knoppix iso and burn it to CD.  Then use it to boot your computer with the mouse plugged into the troublesome port.  If the mouse works correctly then you have a software problem and if the mouse doesn't work then you have a hardware problem.  If its a hardware problem then you are likely out of luck as these ports are not generally repairable.  If its a software problem we can probably solve it.  Let us know the results.