I was wondering whether it might indeed be a driver issue with the PC not recognising the actual USB device ie. the controller itself, is connected? It might just be being use as a mount for the memory card but if the controller is not being recognised then, surely, the memory card will not be recognised either.
WinXP > Start > Control Panel > Hardware & Other Devices > Game Controllers
I too use a flash drive with USB adapter rather than a memory card with controller adapter but from what I remember with the controller plus memory card attached the PC should detect it as a generic mass storage device. It should show up when you attach it, if you click on the Safe To Remove Hardware task icon or go into Device Manager.
One thought; if it is being recognised as an attached mass storage device: is the memory card empty? I've no idea whether this will work but try putting some Xbox saves on it before using Xplorer360. It should recognise those as FATX format and if it still doesn't then that would suggest there is something else, maybe a driver, causing the problem.