That's surprising. I donno much about the specific cabinet but it's unlikely that a USB1.1 and USB2.0 host controller h/w would be present on the same motherboard. Maybe it's a setup issue. As long as you have "enhanced host controller" in your device mgr USB configuration, it should be fine.
I faced a similar issue with a friends' PC. Removing all USB drivers and installing Win XP SP2(service pack 2) solved the problem. SP2 fixes a lot of USB2 issues. I hope you have SP2 installed.
A side note: SP2 creates issues with some older NVidia gfx card drivers. In that case, use DriverCleaner and remove Nvidia drivers, boot next time into VGA mode and re-install the original drivers that came with your card.