IT WORKS!! 
Removable Disk (E) is my USB flash drive.
Thank you! I waited a year for a solution to this problem. If my memory serves me well, I don't think VMware Player 4.0.x had the option to switch from USB version 2.0 to 1.1 or 3.0.
One more question: I also have a Bluetooth 4.0 dongle. If I want to use it with my WinME guest OS, do I simply go back to my VM Settings and check the box for "Share Bluetooth devices with the virtual machine"?