My desktop is Dell Pentium 4 3.2 GHz with XP Service Pack 2.

The extrenal card reader is a SanDisk ImageMate 5 in 1 Reader (SDDR-99)

The SDHC card is a SanDisk Ultra II 4GB SDHC.

This machine wont recognize the card. And often it will lock the machine.

I tried a Windows Hotfix (923293) that seemed applicable but didnt help much.

Any suggestions? Is it the card reader or the desktop or the software (XP)?

Probably the card reader. Older all-in-one card readers only recognize SD cards (up to 2 GB capacity), not SDHC.

I had the same problem on my PC with SP2... this hotfix solved the problem for me on that one. My Laptop is a Dell with SP3 - it "rejected" the hotfix saying that it was older than what was installed... SP3 reads my 8GB SDHC card perfectly, and my SP2 machine read it perfect as well once I installed the fix from this MS page...

KB934428
http://www.microsoft.com/downloads/details.aspx?FamilyId=6EDFB30F-B1AB-42A8-A330-ACD6762961BC&displaylang=en

Probably the card reader. Older all-in-one card readers only recognize SD cards (up to 2 GB capacity), not SDHC.

That was it. Thanks. But now I see that my Canon IS2 doesnt recognize SDHC :(. Is there such a thing as
non high capacity 4 GB SD card which is high speed?

Unfortunately, standard SD cards go up to 2GB max.

That was it. Thanks. But now I see that my Canon IS2 doesnt recognize SDHC :(. Is there such a thing as
non high capacity 4 GB SD card which is high speed?
Most devices that use SD cards can be upgraded to support SDHC with a simple firmware upgrade. Check with the manufacturer of your card reader (or PC) and Canon to see if they've released firmware upgrades to support SDHC cards.