1) Shutdown all instances of PB (version 5.0 and later) and make sure Cepb.exe, CeSvcHost.exe (CeSvcH~1.exe) and DeviceEmulator.exe are gone from the task manager.
2) Back up the C:\Documents and Settings\user
3) Purge that folder [This will destroy all previously configured device settings. It is important to make a backup as in step 2 if you need to retain the other device settings and revert back].
4) Back up C:\Documents and Settings\all users\application data\microsoft\corecon\1.0\addons folder to something outside of
5) Purge that addons folder under the corecon\1.0
6) Create a new one by that name under the corecon\1.0 folder
7) Copy C:\Program Files\
8) Also copy C:\Program Files\
9) Relaunch PB and try creating and configuring a new device.