@RedWarrior:
Chill out dude!
The fact that you can see the drive in the device manager means XP can see it. You can't see it on the desktop, because XP does not have an Amiga FFS (Fast File System) driver installed (has anyone written one of those?)
I can't help you with why WinUAE won't see the drive, it should be showing up on the emulated workbench. I've only ever used hardfiles, but I understand lots of people have gotten it to work. So it's probably just a simple config issue, one of the other guys here should be able to help you out (bloodline? you around?)