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When you connect the usb cable the PC will create a network connection in device manager, that is correct. There should not be a Windows Mobile device.
In the device manager did you click on the network adapter - Windows Moble device and check its status. It should say enabled. You can troubleshoot that from there. I would not try to reinstall the driver however.....
In Activesync connection settings did you select "Allow USB connections"?
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