Ok theres a couple of points here.
The cheap ebay leads are electrically in two parts. One part is the actual car interface, the other is a convertor to change the USB into Serial.
When you attach the USB cable, windows detects the convertor, installs the driver and then allocates the convertor a COM port. You need to find out what this com port is, and thats the port you need to use inside vagcom (ie do not use "USB" mode in vagcom, because its not a USB interface)
Sometimes, windows will allocate the com port a number greater than 4. Vagcom can only see comports 1-4, so if thats the case you'll need to go in and reset the comport to 3 or 4.
I have a pictorial guide here on how to view and change the com port:
http://www.lr90.org/gallery2/main.php?g2_itemId=309
The next point is the interface itself (not the convertor) is powered from the car, so if its not plugged into the car while your trying to make it work (and the car ignition needs to be on) it wont be detected by vagcom.
To get it to start at all in Windows 7 (and probably Vista) you need to right click on the icon, and choose "run as administrator"
So to summarise, plug the USB in, use my guide to find (and change if required) the com port, start vagcom as an administrator, tell vagcom to use that com port, then connect to the car to test.
Cleared codes and tested loads!
