Hi again Woody: the tech gremlins are running wild !! After deleting 'tools' two strange err msgs appeared in guest (Win XP) but possibly had no effect since the tools reinstalled successfully and the removable USB device was connected - it works as advertised.
Interesting that when the guest machine shuts down the USB device appears to revert back to host (Win 7).
One major (?) change was made to the environment - "no proxy" is now used. Could that have been the cause ?
Thanx for you help.
no longer Bewildered Bob