I know this sounds like a idiotic "Slap the thing to make it work" type of fix, but I was having the same problems with running 2.0b11 on XP with USB and when it gave me the error message I just rebooted the player(which in turn with XP reboots the USB connection, you get to hear its wonderful sounds again) and then left the player out of standby and it worked fine.
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Lucas S. Starkvegas, MS