BusDog is a compact tool which provides an interesting way to watch USB activity as it happens.
Launch the program and it should provide a list of connected USB devices (although you may have to reboot before this appears). Check the box next to any hardware of interest, click Trace > Start, and immediately you'll see USB events listed as they happen.
Plainly this is mostly useful for developers, who will find plenty of interest in the Setup tab. There are options to choose exactly what you'd like to be displayed about each USB event, for instance, and the program also supports filters so you can zoom in precisely on whatever it is you need to know.
BusDog does have some far more straightforward applications, though. Do you have a USB device, like a mouse, or a keyboard, which no longer works, for instance? Plug it in, ask BusDog to run a trace, and try using it. If you move the mouse, say, but no USB events are displayed then the problem is a hardware issue.
And if you've a mystery USB device - a flash drive with no brand name on the case, say - then watching the events may tell you more, as they can occasionally contain details like a product name or model number.
Beware, though - the developers point out that installing USB filter drivers like this can be a risky business, as if something goes wrong then Windows may not be able to load any other USB device at all (including your mouse and keyboard). Make sure you have a system restore point available, and a recent full system backup, just in case the worst happens.
And in addition, if you're running the 64-bit version then you'll need to run Windows with TESTSIGNING enabled. The BusDog site has more.