You want to install new hardware but the Add New Hardware wizard fails to recognize the connection of a new device or fails to find an appropriate driver.
Using a graphical user interface
Because many device manufacturers don't register their devices and drivers with Microsoft, Windows XP does not always have a reference point to find appropriate drivers. This symptom is frequently experienced when connecting a new USB device before installing the device driver for the device. Plug and Play may extract and present the proper make and model information from the attached device, but without a known driver, Windows banishes it as an "unknown device." Installing the device driver after the fact will not fix the problem because the device is already committed to the unknown category, so the "unknown device" must first be removed, and then you must install the proper driver before reconnecting the device. Unknown devices may be the modern-day "DLL hell" of Windows past.
Microsoft is quite familiar with the "unknown device" conundrum and offers several suggestions at MS KB 314464, "How to troubleshoot unknown devices that are listed in Device Manager in Windows XP," MS KB 161220, "Removing Unknown Device in Device Manager Hangs Computer," and MS KB 187723, "Plug and Play Printer Is Detected as an Unknown Device."