I have a customer who brought me a computer that they had attempted to do a repair install using the XP recovery CD from Dell. They did an inplace repair install, not a format/reinstall. They got to a certain point of the reinstallation when a prompt comes up about the intel ICH7 usb host controller driver. You need to click yes (or no) to proceed with this driver installation and continue the repair install.

The problem is, this Dell has no PS2 ports, and the USB devices do NOT work because the host controller driver is not installed at this point. USB keyboard/mouse do work in BIOS and POST, but not when the repair installation is occuring.

I don't really think there is a solution to this one other than backing up the important data and doing a clean reinstallation.