This may have been answered already. I'm running Win7 and was having similar issues (USB device not recognized). It would not work when connecting directly to the 2 front USB ports on my PC (but I know these work as I use memory keys in them all the time). I have a cheapo 4 port hub connected to the USB port on the back and this worked. Issue could be either something whacky with my 2 front ports, or (as others have suggested) making sure that a 4 pins get a solid connection when inserted.
Something I am going to try when I get around to it, is to solder a thin layer of solder to each of the 4 pads to build up some height to ensure positive contact. This is reversible provided you have some solder wick. I'll post back to see if that helps.