I realize this is kind of late
I realize this is kind of a late response, but I'm having the same issue, and I found a workaround.
If you're losing USB devices during a repair, try hitting SHIFT+F10 when you first see the "installing devices" progress bar on the left of the XP graphical setup screen (with the collecting information, dynamic update, preparing installation, installing windows, and finalizing installation bullets).
This will bring up a command console (like when you type "cmd" in start-->run), and, for some reason, if you just sit there with the command console open, you don't lose your USB devices.
So when you start getting popups, just answer them as you will. If they're USB popups regarding microsoft logo certification or something like that, I'd recommend saying "Yes," because when i said "No" (hoping the system would default to some sort of generic USB drivers), I again lost my USB devices. But when I said "Yes" to all of the "are you sure you want to install this uncertified driver?" questions, my USB deviced remained intact.