I have just bought an Arduino UNO Clone and I too have the famous USB Installation problem with XP. However on Windows 7 it works just fine, no problems at all.
On the XP machine it selects COM1 and just does not work at all. On the windows 7 Machine it selects COM3 and I can edit sketches, compile and upload without any problem at all.
It would be nice if a driver for XP were released that actually works properly.
I have gone through all the instructions correctly all to no avail