OK, so now we got a bit further. I am now able to communicate with the controller.
When searching for info about the SL811HST chip, it seems that everyone is focusing on its Host capabilities. However, reading through the code supplied for NIOS (the old kit) it seems the "driver" is a modification of SL811S chip driver for Linux ( the files are also called SL811S.h/.c ). I am just guessing here, but perhaps, when in slave mode, the SL811HS works just like a SL811S?
From the Microtronix Docs, i can see that I need to move some jumpers around to go into slave mode. I set up the jumpers for slave mode, and hooked up a USB packet analyzer. It works like a charm with my MP3 player, now when I plug in the Dev Board nothing happens. I had the impression that the Device detection mechanism in USB, is some pulldown resistors - so when the Host ( PC ) detects the cable is being plugged in, I would assume that a SETUP token would be sent... BUT.. NOTHING!! NOTHING is sent.. EVER.. when the DevBoard is being plugged in and out.
One thing I thought was weird though, when I plug in the USB w/o power on the Dev Board, two leds light up. It seems that the Board is wired to be powered over USB or something like that.