Ok i found this at afterdawn and people are saying that it works.
"The drivers are messed up. The same thing happened to me. I also posted this for someone on another sight. Here's what I did to fix it.
1. Uninstall Xchange360 program
2. Go to start, right click MY COMPUTER and go into properties
3. Selection HARDWARE Tab and then DEVICE MANAGER
4. If you see Memory Unit with and exclamation point right click and uninstall it
5. Go to USBIO devices down below and uninstall Xbox360 MU USBIO - Device 1
6. Unplug the memory unit and the USB adapter and plug it back in
7. When plug and play asks to install the new device select the Xchange360
CD as the location for the drivers
8. After device is installed reinstall Xchange360 program from CD
It should work after that."
Try that.