Ok here's what I found out - I discovered a lot of people who have had this same issue when trying to install a relatively new Digital Camera onto XP. I am by no means an expert but the common theme seems to be that either one of 2 dll files are required by the camera to work via the usb connection, and for some reason that I do not understand they are not readily recognizable or pre-installed when connecting for the first time. The files are ptbusb.dll and/or its sister file ptpusd.dll. According to several sites that I contacted, these files shoud by default be located in at least one of these locations - - c:\windows\system32 or \system32\dllcache or c:\windows\drivercache\i386. However, ptbusb.dll was not in any of these locations on the version of XP that I was working on, even after re-loading the SP3 pack and after searching all hidden files.
In the end I went to www.dll-files.com. This was one of the few sites I found that would just let me download a zip file with the file I wanted (with attached note file on how to install it and where), without having to sign up for some kind of fix program that ultimately I would have had to pay for.
I copied this file first to windows\system32 and didn't need to put it anywhere else, because having done this the camera was immediately recognized and the problem went away.