I manually edited the registry keys - I was familiar with the UpperFilters / LowerFilters issue causing problems with reading DVDs.
Running FixIt from suport.microsoft.com/.../925196 does not help, it only recognises, and offers to fix problems with, the installed DVD/CDRW
Additionally, the Dell on-line diagnostics does not detect the problem with USB drives, which is also fail to be recognized in Safe Mode.
Andy