0 for 2.. New Shuffle will not work

Question

After buying a new shuffle yesterday, I got home, launched iTunes and used the check for updates and updated to the new 7.0.2 version. I then connected the new shuffle and nothing happened. I shutdown McAfee, rebooted the machine, restored the shuffle, numerous time and nothing happened. I am running Windows XP and none of my USB ports are the issue. I have a 3G 40GB that works on all of the ports. I have also made sure that neither the docking station, nor my other iPod were connected.
The shuffle appeared to be charging (blinking orange light), however neither iTunes, nor Windows recognized the device. I did notice that every few minutes, my computer would make that initial noise that is typically made when I plug my other iPod in, but nothing ever happened. I returned the unit to Best Buy and exchanged it for another one and I am having the same problems.
I have seen too many problems with other Windows users to think it is something with my machine. I have already spent nearly 5 hours between the two iPods trying to get it to work and if I cannot get help here, I am going to return the unit for a refund.

Answer 1

I reset the iPod, not restore. Sorry. I followed the Reset, Retry, Restart and Reinstall steps a few times but I cannot do restore because iTunes is not recognizing the iPod.
I also followed the steps for altering MSCONFIG and my machine still does not recognize the iPod. If I disconnect the new shuffle and plug my 3G iPod in, iTunes has no problems recognizing it.
I am using the USB ports on the motherboard (back of the machine). I also have two more USB ports (2.0) on the front and a 6 in 1 media reader that has two USB ports, secure digital and flash reader. My old iPod works in all of those ports, however I typically use it on one of the ports on the back. I am attempting to use my Shuffle on the same port that my old iPod uses (I simply disconnected my old iPod).
Microsoft Windows XP Professional Service Pack 2 (Build 2600)
VIA Technologies, Inc. P4X400-8235
iTunes 7.0.2.16
iPodService 7.0.2.16 is currently running.
iTunesHelper is currently not running.
Current user is an administrator.419Z0, Bus Type ATA, Bus Address [0,0]
SCSI\DiskHPT37x_RAID_0_Array___2.00, Bus Type SCSI, Bus Address [0,0]
USBSTOR\DiskSOYO___USB_Storage-CFC0180, Bus Type USB
USBSTOR\DiskSOYO___USB_Storage-MMC0180, Bus Type USB
USBSTOR\DiskSOYO___USB_Storage-MSC0180, Bus Type USB
USBSTOR\DiskSOYO___USB_Storage-SMC0180, Bus Type USB
Connected Storage Devices:
IDE\DiskMaxtor6B300R0_________________________BAH
Universal Serial Bus Controllers:
VIA Rev 5 or later USB Universal Host Controller, PCI bus 0, device 16, function 0. Device is working properly.
Standard Enhanced PCI to USB Host Controller, PCI bus 0, device 16, function 3. Device is working properly.
No IEEE 1394 Host Controller found.
The last connected iPod serial number: JQ4070MGPNU.
The iPod Service Logging Information:
[SERVICE: 0x79C,15:41:43 INFO] Started C:\Program Files\iPod\bin\iPodService.exe (Mon Dec 04 15:41:43 2006)
[SERVICE: 0x79C,15:41:43 INFO] ##### iPodService starting as a service, version: 7.0.2.16
[SERVICE: 0x7FC,15:41:44 INFO] Timed out... Starting device manager!
[SERVICE: 0x38C,15:41:44 INFO] Listener Window created
[SERVICE: 0x38C,15:43:27 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:43:27 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:43:27 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:01 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:01 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:01 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:34 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:34 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:34 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:34 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:34 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:34 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:44:54 INFO] [VolumeRemoved] existing mask 0x0, arrive mask 0x10
[SERVICE: 0x38C,15:45:07 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:45:07 INFO] [DevNodesChanged]
[SERVICE: 0x38C,15:45:07 INFO] [DevNodesChanged]