Yesterday my Lilypad USB was a happy clam. Today Windows says it's an "Unknown Device". Trying a new Lilypad USB did not work either.
Lilypad USB
Windows 7 Professional, x86
Laptop, USB 3.0
Arduino 1.0.5-r2
LilyPad Power Supply, DEV-11259
However, hitting the reset button twice connects for about 10 seconds as "Arduino Lilypad USB Bootloader". Then it returns to the "Unknown Device" status.
This resolved my problem. I hope it can be of use to someone else.
Try the following:
Prepare the basic empty program (empty setup, loop, etc.)
Compile it.
Reset the Arduino using the hardware button on the chip
Press Ctrl + U to upload your code.
If unsuccessful - got to 3.
There is a delay before the boot loader starts the programs, just work on your timing. It worked for me when a bug in my Arduino's code was executing a soft reset every 500 ms.