atmega16u2 not being seen by PC

[RachelAnne]

I have a number of standalone 16u2 chips(16u2 chips datasheet) wired up for prototyping purposes and they are never seen by my PC (windows 7) when attached via USB (I do not mean they are an 'unknown device', I mean they do not even start the driver search)

For sanity check I have wired the chips identical to UNO R3 schematic and flashed (Atmel Atudio->AVR Dragon->ISP->16u2) the chips with UNO R3 usb2serial hex file provided with the arduino IDE. The chips program and verify correctly, but will still not be recognized by the OS.

To check that the firmware I write is actually executing, I altered Unojoy to blink an LED while the USB is waiting on configuration:

// Initialize our USB connection
usb_init();
while (!usb_configured()){
LEDon(RXLED);
_delay_ms(50);
LEDoff(RXLED);
_delay_ms(50);
} // wait

The LED blinks and the loop never exits.

Any idea I what I have screwed up?

Shot of schematic attached. I am guessing it will look familiar. It is currently breadboarded, not on a PCB.