Found this post in the discussions:
It identifies the file /System/Library/Extensions/AppleUSBEthernetHost.kext as the source of a similar problem.
Tried the connection once more, just to verify the problem still existed.
Restored the file from my Time Machine backup (an effortless task) and presto - problem solved.
Interesting note: file size, and creation and modification dates, had not changed - but the restore worked.
Why iTunes 10.7 affected this file is a question for an iTunes guru.
Vote of thanks to David Empson for the research!
I am using OS X Snow Leopard (10.6.8) and just applied the latest security updates for the OS and iTunes 10.7. After I have installed iTunes 10.7 I can no longer use USB tethering.
I have tried to follow the steps here and in https://discussions.apple.com/message/17788766#17788766 to reinstall the "right" AppleUSBEthernetHost.ktext with the universal binary 2.3.0 so that I can have my USB tethering back.
Even though I could take a copy of that from Time Machine, it turns out that I couldn't install it because iTunes 10.7 uses a higher AppleUSBEthernetHost.kext version called 2.3.6for Intel binary only (as iTunes 10.7 only supports Intel machines). This meant my effort of fixing this has failed, even worse I have deleted the iPhone connection option on Network Preferences so I can not even test whether I can connect through USB tethering!
I'm on Snow Leopard (10.6.8) and iTunes 10.7. Tethering didn't work on my iPhone 3GS with iTunes 10.7 or the previous version installed. After trying every possible thing I could find in the forums, including deleting AppleUSBEthernetHost.kext and reinstalling iTunes, to no avail, I finally simply replaced the file AppleUSBEthernetHost.kext with version 2.2.0 using Time Machine, which seems to have fixed the problem.
Jiijiim...? You're saying you used 2.2.0 instead of (written by someone above you) 2.3.0 and it worked? Or is the .2 a typo that should be .3?
I couldn't find 2.2.0. The 2.3.0 made my iphone show up in network connections again, but still would not recognize the phone (usb will power the phone, and itunes sees it, but not for tethering). Seems there should be an easy solution, but still haven't found it.
2.2.0 is correct. I tried 2.3.0 as well but that didn't work. Here's another thread on the subject with a slightly different angle:
Seems different things work for different people with the apparent same problem. If you want to try with 2.2.0, you can download it here:
we have the same laptop , cellphone and same problem:
-download the itunes 10.6.3
-delete the itunes (10.7)
location: Macintosh HD\Applications\"iTunes"<--delete this (10.7 version)
-delete the AppleUSBEthernetHost.kext
location: Macintosh HD\System\Library\Extensions\"AppleUSBEthernetHost.kext"<--delete this (2.3.6)
delete the "iTunes Library.itl"
location: Admin\Music\iTunes\"iTunes Library.itl"<--this will trigger loading the file on your fone
then install the itunes 10.6.3 and restart...
then try to plug in your device for USB tethering...
"WORKS FOR ME!"