Warner: Is the USB device your trying to connect recognized in Linux? Can you mount it & use it on the host OS? That's a requirement before...
Yes, Xen is quite nice... unfortunately a lot of my hardware doesn't play too well with it (no VT bit). So I use it when I can. :) Also an FYI...
Did you try to manually bring up the VM on the other host by any chance? Using the VMWare Console? If so, did you specify 'keep' or 'create'...
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