It a problem that continues to annoy me and I have no idea why it happens.

In the previous thread, RyanVM suggested that you dont remove CAT files. Does that fix it and how do I make sure those files arent removed? Does disabling SFC remove them?

Id also appreciate if anyone knows of alternate solutions.

Yeah leaving the cat files in fixed that one for me.

ok but how do i make sure theyre left in?

can someone answer my question?

Yeah by NOT selecting the remove cat files option in the advanced setion of the hotfix page...

I never checked that box and I double-checked that it was unchecked. It still didnt help.

I'm experiencing the same problems, when using untrusted user accounts.
As soon as I let nLite 1.3.5 integrate drivers into the source, any USB device moved or inserted will end up prompting the "Found New Hardware" dialog.
However, If I integrate the drivers otherwise (e.g. using setupcopyoeminf.exe at T-39), all is fine.

I Started with a clean Windows XP source and let nLite do the following in one run:
- SP2 integration
- post-SP2 security hotfixes and KB888111 integration
...and yes, the advanced option to remove the catalog files is not enabled.
- multiple drivers integration

What can be causing this behavior?

It has nothing to do with nlites' driver integration. Afaik it's a hotfix that causes this. When I left out all post SP2 hotfixes and integrate drivers, IE7 and WMP11 all is fine.
I had no time to check out what hotfix it is.

I just tried a customized cd of Windows XP SP2 and I did not get the popup. Previously I was using Server 2003 SP2.

Could it be something different in teh OS or...?

I'm having this problem with a volume copy of Windows XP SP2 and nLite 1.4 beta. The only pieces of nLite that I am using are driver integration (intel sata, broadcom network, and some intel chipset drivers,) unattended install, and creating an ISO. I am not removing any components of Windows (including CAT files,) I am not adding any hotfixes or updates, I am not using the 'tweaks' or 'options' section. I have completely re-built the nLite distribution from scratch three times now, and it has been consistant in that the HID-compliant devices that normally install as a standard user without any fuss now prompt for admin credentials. If anyone has figured this out yet I would be really happy to know how it was done.