Here is a possible solution to the original problem, but I don't know why it works: Plug the drive into a computer running Vista. (I know this is an XP forum, but read on ...)
I have a similar problem. I have a WD Passport 60 gig that I keep music and personal files on at work. Computer is running XP Pro, version 5.1.2600. Every few weeks or longer, the drive simply disappears and cannot be accessed, even after unplugging and replugging it in. The drive light is on, and you can hear a soft rhythmic clicking, as if the drive is spinning on an endless loop. No error messages, nothing. The drive is simply not detected. Rebooting the computer does not solve the problem.
I took the drive home to see if I could recover it. I plugged it into my Vista box there, and it started up fine. All files were there, and fully accessible. The amazing thing is, after this "reset" through Vista, it works fine when plugged back into the XP computer at work. (At least, until the next time it craps out, which can be weeks later.)
I have done this numerous times, and it always works. It's somewhat annoying, but better than not having the drive.
Note that plugging it into other XP computers (at work) does not "reset" the drive, and you still just get the clicking sound, with no recognition by the OS.
Hope this helps. More importantly, does this suggest to anyone what the underlying problem is? I'd like to be able to solve the problem for good ...