This sounds similar to the Tvmedia spyware fiasco. But you may recover if you eject all spyware and then uninstall, reinstall a DVD player.
As to the USB item, try this link http://groups.google.com/groups?q=xp+usb+permissions+sp2&hl=en&lr=&selm=f24b2b8f.0410172006.38be93e9%40posting.google.com&rnum=3
Items 2 3 and 4 may help.
Ok...the basics. I have Win XP, 1.8ghz P4. First off I want to talk about my Media Player. It seems as soon as I downloaded and installed SP2 My PC will no longer play DVD's. I'll insert a Movie and Media Player opens up and then it crashes saying that it has encountered a problem and needs to shut down. The weird part also is my other media players (Power DVD and some other that I never use...cant remember the name) wont play either and both crash with the same message. Now Media Player (version 10) will do everything else just fine....Just DVDs. What is going on here?
I have a Canon Powershot Camera that I have used for ahwile. I cant remeber when but at one point the software stopped working and now my camera is not even detected by XP when it is plugged in via USB. Now I tried to erase and re-install the software and it would work every now and again but still fails. Now it doesnt work at all. Now....I erased the programs that came with it...Lets see...Photo-stitch, File Viewer, ZoomBrowserEX and when I try to re-install the auto run tells me that versions on the programs are already installed and I dont need to re-install. Now I double checked that I did un-install these programs but maybe they are still lingering around...I used the search feature and even used REGISEDIT to delete. But I am still having problem. I cant even use Windows Camera/Scanner Wizard to download pictures from my camera...This is very frustrating...Anyone have any ideas??? Sorry for being so long winded.