I just did a test and PowerDesk finds all *.sys files in my dls4Remotes subdirectory, so that's a non-issue.The sys file is a system type file and wouldn't show up in a search by default. You have to go in the advanced settings tell it to look for system files, and make sure system files are not hidden in your file explorer.
In short, yes, admin on both machines - have to be. That's the first thing I rechecked when all this happened.Are you an admin on xp (and/or vista)? If not, you may not have the proper permissions to install a driver. The BSOD makes me think there are bigger issues we may not be able to solve here. I'd abandon that effort for now and try vista if I were you.
I don't know how much of an issue this might be but this machine is a patch quilt of sorts... a P4 1800 ASUS motherboard with something like 1250 meg ram. Could this be too old????
Maybe we should "talk"...I've reinstalled many, many times over the years trying to get different versions to work on different computers, and I've actually never seen a case where the driver wouldn't install at all. I've seen it not perform correctly, but never fail to install. So I really can't explain what's going on in your case.
If all else fails, and you still have a parallel JP1 cable, we can definitely get that going in xp or vista with a parallel card. PM me if you want one cheap.