Post the model number of the laptop. How old is it? Did you have any other problems leading up to this, or was it sudden? It could be as simple as a corrupted USB driver.
I have had to replace my hard drive twice in my 3 year old Gateway laptop. The first time I was able to save data between freezes. Second time it just wouldn't boot anymore. I think they just get too hot and cook parts.
Is it ANY usb item you insert or just one? Could be drivers, could be port, could be flashdrive (or other)
Could be WRONG (older) usb drivers, it might just need a service pk. to upgrade to 2.0 drivers.
They make laptop hdd adapters that allow you to master/slave the drive to a desktop and usually you can save all of your old drive's info.
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Check the manufacturers website for your computer. In the support area there should be a downloads section. There you should be able to put in your model number and find driver updates. You might also download the BIOS updates or firmware updates if available. They may make a BIG difference. OR your USB could just have gone bad. There is a controller on board for USB and it could be trashed. I'd go with drivers, firmware and BIOS before I get too worried. If you aren't ready to ditch the computer, consider an add-in USB card. A PC Card (PCMCIA slot on laptops) with 2 usb slots is probably about $50 and a PCI USB card for a desktop is probably about $20.