Make sure that you are using the latest version of the Line 6 Monkey software to update your Pocket POD. Currently Line 6 Monkey 1.32.
If the problem persists, disconnect all other USB devices (except for a mouse, keyboard, and POD) while troubleshooting this issue. Completely remove ANY USB hubs and test the Pocket POD on all of the USB ports your computer has.
If the problem is still present, I suggest isolating the problem by trying on a different computer with a compatible operating system (Windows XP, Vista, Mac OS 10.4, 10.5).