external device not recognized.

MAke sure plug N play is enabled on your computer. Here's more from the MSFT help center:

To take full advantage of Plug and Play, you must use an Advanced Configuration and Power Interface (ACPI) computer, running in ACPI mode, and the hardware devices must bePlug and Play. In an ACPI computer the operating system, not the hardware, configures and monitors the computer.

The Windows operating system determines which programs are active and manages all of the power requirements for your computer subsystems and peripherals. ACPI lets the operating system direct power to devices as they need it, preventing unnecessary power demands on your system.

Because Windows controls your computer's resources and configuration, you can installPlug and Play hardware devices without restarting the computer. Windows automatically identifies the new hardware and installs the drivers it needs. If you are using any other type of computer, you may need to perform some setup steps manually and restart your computer when installing new hardware devices.

My USB is not recognizing the external device.  The drivers are loaded but it looks like they are not being recogized either.
 
My husband had no problems installing the same device on his computer and he has XP as well.

Your description is not clear.

Most computers have several USB ports; some monitors have USB ports.  Have you tried connecting the device to all of them on your computer?

Do the USB ports on your computer fail to recognize only the one device?  Have you tried connecting other USB devices to your computer?

Was there ever a time that the device worked with one or more USB ports on your computer?

Try the following....

Disconnect the unrecognized USB device.

Go to Hardware Device Manager (right-click Computer on desktop, click Properties > Hardware > Device Manager), select Universal Serial Bus Controllers, then click Action > Scan For Hardware Changes.

Reconnect the USB device.  If it still not recognized, try Scan For Hardware Changes while it is connected.

None of these steps is guaranteed to work.  The USB ports on my monitor seem to have stopped working.  I have not yet determined the cause; the current theory is a hardware problem with its internal hub.