answer is here
So, after spending many hours of installing/uninstalling iTunes, monkeying with the system registry and everything short of duct taping the darn thing, I’ve finally figured out a way for iTunes on Vista to recognize my iPhone. Ultimately, the problem turned out to be the default drivers loaded by Vista (!). Because of which, the phone was actually recognized by the OS, but was in fact only usable as a camera to import/export pictures. I fixed it by going to “Device Manager”, right clicking on “Apple iPhone” under “Portable Devices” and selecting the “Update Driver Software”. The appropriate drivers are stored under “C:\Program Files\Common Files\Apple”. After the successful driver update, your iPhone will happily show up under the “USB Controller” indicating that the phone is ready for action
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