I have a USB drive (format is FAT32) that hangs WINDOWS SERVER 2003 (being used in WORKGROUP not DOMAIN) if it is plugged in during startup or reboot. I also have another USB drive attached that does not hang the boot proccess. The hang happens during DOS startup - as the DOS is searching for USB connections. This happens when both drives are connected seperately to the server and when they both go through a USB hub (which is how I wish the final solution to be.)
Removing (or just turning off)the problem drive allows the server to startup correctly. I can then add the problem drive and it mounts normally.
This 'hanging' drive is being shared, which strangely gets forgotten after it is added after a re-boot.
Interestingly I have a multifunction printer (USB) on my PC at work that also hangs the startup procedure.