huntd69:
3) I built the circuit found on the Practical Arduino website here practicalarduino.com
Not quite. From that page:
3.6V Zener diodes (must be rated at 0.5W or less, 1W won't work)
You show 3.3V Zener diodes. I'm not saying that is the problem, but once you start straying from the circuit, especially with something rather voltage sensitive like USB, you aren't helping.