Did you upgrade the WIN98, or install XP from scratch? If an upgrade, you might want to install XP on a fresh hard drive.
I am using the Ipac via the PS/2 port, with a keyboard attached to it, and it is working fine in XP...
Have you tried unplugging it (while it is booted into XP) and then plugging it in again?
Does the keyboard work when plugged into the Ipac, or is the Ipac blocking it?
One other option I can think of...
Boot up into XP, but unplug the Ipac as soon as the computer detects it. Leave it unplugged, and then go into device manager and remove the keyboard device.
Next, shut down the computer, and plug the Ipac back in. Turn it on, and try and let XP detect it again.
Other than that, you might want to email Andy at Ultimarc and see if he has any ideas....
Hope this helps a bit!