David,
there's a serious problem with the OS upgrade via floppy. All users report the same error with disk 14. (I got this from the German forum).
If your USB is o.k. then you should use the USB update.
Don't know what your problem is with USB but I heard that the XP drivers do not work correctly. Win 98 (SE) is o.k.
There seems to be an updated driver for Win XP but not sure if that helps.
If you know somebody with Win 98 then use this way.
However, if your USB is broken (several reports here as well) you're out of luck.

Thomas

[This message has been edited by exNY (edited 05-04-2003).]