“one of the USB devices attached to this computer has malfunctioned and windows does not recognize it” you will get this error even if all usb devices are connected and functioning.
It is caused by a problem media encoder
7.
Windows Media Encoder 7 may not recognize a Universal Serial Bus (USB)
camera, even though the Windows Media Services 4.1 encoder recognizes it.
Although it has only been tested with the Intel USB camera, Windows
Media Encoder 7 works with most USB cameras that have a Video for Windows (VFW)
or Windows Driver Model (WDM) driver. If a USB camera works with Windows Media
Encoder version 4.1 but does not work with version 7, the VFW drivers are
properly installed, but DirectX Media may not be properly installed.
Windows Media Encoder 7 uses DirectX Media to capture video from devices. If
DirectX Media is not properly installed, DirectShow cannot properly recognize
the USB camera because the camera cannot communicate with the VFW drivers.
DirectX Media can be improperly installed because of many reasons. The most
common reason is that Microsoft Internet Explorer was only partially installed.
To resolve the problem, perform the following steps:
1.
Uninstall Windows Media
Encoder 7.
Reinstall DirectX Media 6.0 from the
following Microsoft DirectX Web site
Reinstall Windows Media Encoder 7 from
the following Microsoft Windows Media Web site
The information in this
article applies to:
Microsoft Windows Media
Services
Microsoft Windows Media
Encoder 7
Microsoft Windows Media
Encoder 7.1