Dear Friends,
I also had a similar experience.I could not install the ISP1362 river for one month. I solved the problem recently. You try connecting both USB cables( Blaster and Device ) from the begining. Also do this while building the project.after build is complete rmove the USB cable from Device port aand run the C program, once u get a message chip ID XXX, u connect back the Device USB, your DE2 board will be detected by the OS as a new device and it will prompt you to install the driver.
I hope this will help you...
Regars,
Mahesh