All of our systems running version 10 have USB dongles as well.
We have had this issue before with Flexi and every time it has been related to the USB dongle driver in some form, the difficult part is trying to figure out the right combination of installing things, plugging in the dongle, and starting up Flexi to make it recognize properly the first time in
Windows XP.
Wiping the hard drive will do you no good unfortunately, if you've already reinstalled
Windows XP then wiping the drive will make no difference the second time around. If the driver on the disk is not working, I'd suggest looking online to find the latest driver for download, I've also had to do this before.
http://www.safenet-inc.com/support-downloads/sentinel-drivers/#
I would suggest uninstalling Flexi and then completely remove the USB dongle from the
computer. Next, install Flexi completely, followed by the USB driver directly from the website. Do not install the USB dongle yet! Restart the
computer after installing the driver, and then plug in the USB dongle after
Windows has completely loaded. Wait a moment, watch, and listen.
Windows may play a sound which is stating that it is recognizing and installing a new hardware device. It may even prompt you with a window to Add New Hardware, which you can select to use all the default settings, or it may just ask you to restart the
computer again to complete the installation of new hardware. Either way, restart your
computer once more with the USB dongle now plugged in and then you should be alright to open Flexi.