Okay step back. 1) did you try a different USB port? - Same different result?
2) Did you try a different USB cable? - Same different result?
3) did you try a different PS2 controller ? - same different result?
4) did you try the USB cable and controller in another computer? Same different results?
1) Determines if that USB port is broken or not
2) Determines if the cable is broken
3) Determines if the PS2 controller failed
4) Determines if the USB and controller in another system work together (may be mismatched items).
If your hardware is all working right in other systems, nothing works in Windows 7 no matter how you tried, there is no 'real solution' like type a command or reset a reg setting. You should just restore 24hours prior (only affects PROGRAMS no DATA files - like where you last saved in your game). Suck it up and deal, this is the simpliest solution for Windows.