I have no idea what might have happened here (although using a USB drive with a Power PC macs is a mistake): it really sounds like you might have also had a damaged volume where either the kexts were not being listed or something was preventing them from listing.
(Your report, and the other in this thread, are the only times I've heard of this problem, so it's rather weird.)
I'd suggest an archive-and-install -- not a repair -- with your Leopard DVD.
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--Dave Nanian
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