I found a MUCH easier solution to this issue. I simply deleted the device from the Device Manager and rebooted. When I rebooted the drive letter was assigned to D: instead of E:. Here is exactly how I did it:

1) Right-click My Computer and choose Manage
2) Select Device Manger
3) Expand Disk Drives (make sure your SD card is inserted before you go to Device Manager)
4) Left-click on SD Memory Card and choose Uninstall
5) Reboot

Hi guys, new guy here.

Just thought I'd register to let you know another way of fixing this is similar to Redwin's idea, however it doesn't require a restart.

If you have Daemon tools installed, simply right click on the tray icon and set the amount of virtual drives to 'disabled'

worked for me, who knows.

Thank you Bluemouse!! After scouring the internet for 3 weeks this finally worked!! I backed up the registry filed like you said, and after a blue screen and a couple of reboots, I plugged in my mass storage device and WALA!! It was automatically assigned letter F; by the XP explorer!! Letter E: was assigned to a virtual drive on my Lenovo IBM, drive C:, used for backup and recovery. I suspect that there was a conflict before, with the IBM virtual drive and my USB mass storage, both trying to use the E: drive. I had tried using Disk Manager to assign another letter to the USB mass storage, but it still had not worked. Oddly enough I was able to access the USB mass storage device from the the Device Manager and other programs like Outlook for attachments, but NOT through XP Explorer. NOW it works!! Just a question: I noticed that the DOS-Drive letters were recreated in the mounted device folder.... How about the upper-filter thingy? Is that automatically re-installed as well?

Now another issue: How do I get my Plug and Play to work?? I normally wouldn't care, but I'm trying to install a Canon printer that relies on the plug n play for installation. Before I reinstalled Windows XP, I used to get a "New Hardware Detected". Not any more. Anybody??