i've had a similar problem when trying to connect usb keyboards and mice i've found that they just don't work unless pluged into there own port on the pc.
I think with your situation that the smaller sized pen drives don't need as much power and so will work via a hub, but the 1gb and above use alot more power and so won't work.
You are right that the hub being usb 1 will slow things down but that wouldn't be the reason for the drive not working.



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