Windows XP does not do well with VMware's USB 2.0 because Windows XP handles USB differently than what is expected. I suggest using Windows 98. By running Windows 98, USB 2.0 will work with out any problems. I also tried using a virtual machine of Linux and I have no problems. I think Windows 2000 has the same problem as Windows XP.
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The issue has to do with the way that VMware handles USB. The VMware drivers treat all USB connections to the Guest operating system (XP) as USB 1.2 connections.
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Incorrect and it is the opposite. Windows 2000 and Windows XP uses different ways to handle USB. Like I said above, use Windows 98 instead.