Most likely the USB is already enabled and going into his BIOS to check these will confirm this. The USB has to already be enabled because the USB devices DO work...be it in an odd manner. Sound like a Windows software issue in this case. It could very well be related to a corrupted USB driver, possibly(unlikely in a non-OEM system) there could be USB controller or root hub ghost drivers in the system. One suggestion I would have is to blow out the USB key in the registry, this key keeps track of all USB related drivers in the system(aside from the USB controller itself). Following some possible troubleshooting steps I would suggest taking, including steps to go backward and undo it if things go haywire.
First, don't do any of this if you have a USB keyboard AND mouse on the system, if you do have both of them as USB the system will hang up during boot on a message that says "Windows did not detect a PS/2 mouse" and you won't be able to hit enter to OK it so the system can redetect the mouse because the keyboard won't be installed yet. If either devices(or both) are PS/2 then these steps should have no adverse affects on your system. First disconnect all of your USB devices then reboot the system into safe mode(Tap F8 or hold Ctrl when you first power on, then choose safe mode from the startup menu) . Go to the device manager in your system properties and remove any USB controllers that are listed. Close the System properties, then click Start, Run, type "regedit"(no quotations) into the box. In the registry editor navigate to HKEY_LOCAL_MACHINE, then to the Enum subkey, inside here you should find a USB subkey that all USB devices will be listed under. Delete the USB subkey from within Enum then reboot the computer. The system will redetect the USB controller and may prompt for your windows CD or a driver disk(if it's needed the CD would have come with the motherboard). Once it has reinstalled this the system will redetect your USB root hub and may again prompt for the drivers(or Windows CD). Now plug your USB devices directly into the USB ports on the back of your case(don't use the hub yet), only attaching one at a time and reinstall them if necessary. Now test and see if the issue has been resolved.
Disclaimer: Under normal circumstances the registry is absolutely NOT a place to be simply "deleting keys", ALWAYS USE CAUTION WHILE EDITING THE REGISTRY. The Enum key(and all structure below it) is the ONLY registry key that will recreate itself(during PnP hardware detection on bootup). If any other vital keys are deleted outside the Enum key, you'd better have a backup copy of the registry to restore to or you're stuck reinstalling Windows onto the system again. Now if by chance something does get deleted that shouldn't be while using the registry editor, all is not lost. If things go haywire after editing the registry, in Win98 you can boot the machine to a DOS prompt, navigate to the C:\Windows\Command prompt and type "scanreg /restore"(omit quotes), select a date you wish to restore to and the system should go back to that date's old backup copy of the registry(windows only backs up 5 copies of registry as the maximum by default, so don't use the scanreg /restore utility too frequently). If you're running Windows ME you can boot to Safe mode and run a System Recovery to go back to a previous date, this utility is found in your system tools directory in the start menu.
Let us know if this or any other steps work out for you axslinger. One other thing, is the hub you are using a powered hub?(does it have a built in power supply that must be plugged into a wall outlet?) If it is not, I might suggest purchasing one that is powered, that way all the USB devices you have attached to the system will not be drawing all their power from the computer's power supply(and therefore also through the motherboard). Powered hubs dramatically increase the longevity of both the USB devices themselves and the motherboard in a system =)
Hope everything works out for you,
Greatwhite, HP Pavilion Phone Technician