What is your operating system?...Win9x or 2k/xp?
I use Win98se and Win2k in a dual boot...recently, while in Win98 I wanted some data from my external setup (with an 80 gig Maxtor)...it acted much like yours and I figured the USB setup or Hard drive had failed.
I booted into Win2k and it worked just fine. I still have been unable to get it back under Win98...I think I may need to reinstall thew drivers for the add on USB card and possibly the external enclosure.
Don't write it off as dead just yet.