Is the area you are using your computer dry/ dusty?
Why i'm asking this is because i've seen static shock kill ALL the USB ports on a computer and a simple - power off - unplug of everything (the wires) leave it for 5 minutes and plug it all back in fixed everything.
Also is there any damage to the USB cables? I've come across USB cables that were slightly damaged giving a connecting/disconnecting problem.
jahn6, are you having this issue with all your USB ports? Both the ones in the back of your case and the front/top/side ones?
An old generic PSU that says 450W could be anything, and can be a problem... however the board would be the first suspect. M2N was a budget line from Asus that ended up in a lot of emachines and cheap HPs as I recall.
You might want to try a BIOS reset.
When you say PS doesn't recognize the KB on boot, do you mean during POST or after the OS starts loading? If it's hanging at post due to no KB, I would strongly suspect the motherboard first, and then perhaps the PSU.