Windows Vista upwards have a group policy setting to block removable media such as USB flash drives and USB mobile phones.
Windows XP however lacks such a setting (or I can't find it) so I need an alternate strategy to implement network-wide removable media blocking for all non-administrator user account sessions.
Is there an independent software I can use, or a registry setting that automatically enables for new users? (Our user accounts are within a domain via Windows Server 2008, any user can login to any PC)
http://support.microsoft.com/kb/823732
if you cant get that to work, try disabling the usb controller in the bios!
make sure you use a ps2 type connector for mouse and keyboard.
also physical prevention http://www.lindy.co.uk/usb-port-blocker-pack-of-4-colour-code-blue/40452.html
I haven't found a one-size-fits-all strategy for setting this up on domain computers. You're going to definitely have to look at different methods (maybe even have to try a few of them yourself), and see what's going to work best for your users (and you). Microsoft suggests registry modifications, but fails to mention ways of implementing this using more efficient methods such as GPOs and/or startup/logon scripts.
This blog post by Hannes Schmidt dwells more into an automated method to restrict the use of USB storage devices using a GPO with an ADM Template (provided by him). It aims at restricting the Plug-n-Play (PNP) process from running for USBSTOR (Access to USBSTOR.INF and USBSTORE.PNF). What I like about this approach is that it still gives 'allowed' users access to use USB storage devices (such as administrators and special-cause groups), they'd only have to follow a couple of extra steps.
You'll find plenty of troubleshooting tips by reading the comments below Hanne's article.