The external hard drive worked perfectly on any other Mac. So, I knew it was something 10.2.8 didn't like about the USB card. Suggestions to reinstall 10.2.8 with the combo updater did nothing. One suggestion by jpl over at Apple discussions seemed to do the trick. I replaced the IOUSBFamily.kext extension with an earlier version from 10.2.6.
I downloaded the USB Software Debug kit 199.4.1, which contains the IOUSBFamily.kext extension. The installer does all the work for you. After restarting, it did take a while to come up, hanging on the white screen / black Apple. Nevertheless, it came back up and all seems well.
The one caveat is that it does return you back to USB 1.0 and therefore is slower, but at least it works!

