Using Google's calculator ...
http://www.google.com/search?q=500+x+10%5E9++x+0.38+%2F+24+%2F+60+%2F60&btnG=Search
... your transfer rate works out to 2.2 Mbytes/sec.
That's not normal. USB 2.0 external hard drives usually achieve around 20MB/s.
I would verify that your drive is not connecting at USB 1.1 speeds.
How does Microsoft's UVCView utility detect your USB drive? Does it show OHCI, EHCI, or UHCI USB Host Controllers?
http://www.users.on.net/~fzabkar/USB_IDs/UVCView.x86.exe
I would also check whether any of your drives, either internal or external, have been downgraded to PIO mode. Windows XP will downgrade a drive's performance from DMA mode to PIO mode if it detects more than 6 CRC errors.
DMA Mode for ATA/ATAPI Devices in Windows XP:
http://www.microsoft.com/whdc/device/storage/IDE-DMA.mspx
DMA reverts to PIO:
http://winhlp.com/node/10
You could benchmark your drives using HD Tune:
http://www.hdtune.com/download.html