I had pretty much the same problem as you have. Was able to install on a Win 98SE machine, but not on my Win ME which had a prior installation of ActiveSync for the old ipaq
I found this helpful:
http://support.microsoft.com/default...;en-us;q264693
Remove the non-working copy of ActiveSync.
Do NOT have the USB cord from the cradle plugged into your desktop computer while you (re)install ActiveSync.
The cradle is not a USB device by itself - but the cradle + Axim apparently is. The cradle by itself will not trigger the correct driver installation - but the cradle+Axim will.