The main factors for USB in XP are:
1. Adding the USB virtual hardware under Virtual Machine > Settings. If not present, click the + symbol in the lower left and add a USB controller
2. For USB 2.0 support checking both USB 2.0 and automatically connect devices in the Virtual Machine >Settings > USB section
3. Having the latest VMware Tools installed via Virtual Machine > Install VMware Tools
You can verify XP recognizes devices by looking in Device Manager (Start > Run > devmgmt.msc), open the USB controllers section