if you can format the drive then do it.also by hardware run fine i am assuming that on inserting pen drive you get a ding sound in windows & then windows gives you some kind of error msg like unknown device etc.
@ OP - the pen drive working fine on other PC ?? if yes try un-installaing the USB Controller drivers from device manager and after inserting the pen drive on a USB port check device manager / event viewer for any error messages.
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