Hi,
Thank you for providing an update on the issue.
Are you still facing the same issue when you connect any USB device after performing as system restore?
If you still find the same issue, you may proceed further.
As all the USB devices fail to work or the drivers for the devices would fail to install, let's find out if USB.inf file exist. When the device is connected to the computer, Windows will search for the file and install the drivers. Can you verify if the .inf file exist under the following location?
C:\Windows\inf\usb.inf
"C" is the operating system drive.
If it's not there, you can copy the same file from another working computer and paste it in the location mentioned above.
If the issue still persists, let's run SFC scan and find out if there are missing or corrupt system files causing such issues. Refer to the link to know how to run the scan on Windows 7:
http://support.microsoft.com/kb/929833/en-us
Please let us know the results.