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Problem now solved. A friend suggested plugging it in when computer was on, and much to my surprise, it worked. I always thought hardware had to be plugged in when computer was off, but they say no.
To clear things up - you shouldn't add/remove older devices (such as serial connected) devices whilst the computer is on. Newer USB devices are "hot-pluggable" which means you can put them in/pull them out as needed. Just make sure you double-click on the arrow pointing to the left at the bottom right of your screen (opposite the start button) and click safely disconnect hardware before pulling it out.