I have the same problem like everyone else in this forum! here is the solution:
1. The USB modem driver came with the CD may or will not work, so get the latest drivers for it.
2. Before install the new drivers, change your phone setting under " setting -> USB connection -> from MASS STORAGE to DATA LINK.
3. Plug the usb cable to the phone and to your PC, it should do anything or give any message if it does just cancel it for now.
4. Install the new USB driver you just download, while install it will said something like " does not work with XP " just click OK don't panic.
5. After it finished installed you will see by the clock that it find the USB LG blah blah...and ding ding sound if you have sound on.
6. Now go back to LG Sync software and click on Connect & choose LG modem com port whatever it there.
7. You're done !!!
Here the link where to get the new USB driver:
http://it.lgmobile.com/web/web.product.manualSoftwareRF.laf
Yeah the link is all Italian ...don't panic, I couldn't read it either LOL...just click on the picture where you see the phone and the PC with wrap around with arrow, then follow instruction will be in English.
Good Luck!
Keep posting good answer that you find and help out other just like US!