Leo,
I run XP Home at home on a Mac (using VMware) and I can connect to my ESC so there is hope!
At one time, I did have an issue on an actual Window's PC running XP. It turns out that for some reason my USB ports themselves on the PC were disabled, and so XP complained that it couldn't find the driver. It took me a while to figure out what wasn't working. In that case I was able to reenable the ports. But I assume you can use your USB ports for other things, like a printer or that you can download a digital camera using a USB cable. This just means the USB port is alive and functional.
So you can start the CastleLink program.I assume that if you plug only the cable in that has the little PC board on it, that much is ok. But if you plug in the ESC, the light (at the bottom of the CastleLink window) doesn't go green. Is that more or less correct? I assume a real led is flashing in the ESC itself when it is plugged in.