Q: "System extension cannot be used" after installing iTunes 11.4

I was having the same issue and had reinstalled iTunes a few times with no success. As an experiment, I redownloaded iTunes from Apple Site this morning and TURNED OFF my iPad. Turned it off not put it to sleep and reinstalled and all went well. I do not have an iPhone and the iPad is my only extra apple device. There was no message this time and so far so good.  I have also not had any problems that I can see

Send Apple feedback. They won't answer, but at least will know there is a problem. If enough people send feedback, it may get the problem solved sooner.

Feedback

Just installed iTunes update and got the same error. I just tried my printer which is attached via USB and it doesn't work so I assume anything that uses USB will not work now . Thanks a LOT Apple!

Are any of your USB devices working now after reinstalling iTunes from the Apple website?

I just downloaded iTunes 11.4 and installed it, same error message.

This fixes it.

You are basically removing ( or renaming as I did) the old kext and then rerunning the iTunes installer which will then properly install the kext.

http://blog.iphoting.com/blog/2012/09/04/fixing-broken-iphone-usb-tethering-on-o s-x/

To fix the faulty AppleUSBEthernetHost.kext, it needs to be reinstalled from the iTunes package. Follow the steps below:

1. Unplug your iPhone from the computer.
2. Download the iTunes installer.
3. Remove the old kernel extension: 

    $ sudo rm -Rf /System/Library/Extensions/AppleUSBEthernetHost.kext 

4. Run the iTunes installer and let it finish.
5. Load the updated kernel extension: 

    $ sudo kextload /System/Library/Extensions/AppleUSBEthernetHost.kext 

Yeah I did that only I deleted the .kext file with finder, enter my password and sent it to the trash. Then I reinstalled iTunes which didn't get the error this time. Then I reloaded the kernel extension with the command above. Everything seems to be fine now. The AppleUSBEthernetHost.kext file is now dated July 2014, the deleted file was from 2009.

This is technically "in response" to Amazin' Mac Mini, but I really want my response to be spotted by Coola Boola.  I did exactly what Amazin' Mac Mini did, and it solved the problem--i.e., "//System/Library/Extensions/AppleUSBEthernetHost.kext” was installed improperly and cannot be used."  So, Coola Boola, please give it a try--it worked!…and thanks to both Amazin' Mac Mini and wldcrdace !

the "//System/Library/Extensions/AppleUSBEthernetHost.kext can just be replaced to overcome the problem as indicated below. Mine was dated 2012 and after the latest iTunes update, stopped working. I noticed this as my personal hotspot connection between my MacBook Pro and my iPhone failed (I use the USB cable for this). To overcome the problem, first unlock the //System/Library/Extensions/AppleUSBEthernetHost.kext file, then drag it to the waste bin and empty the waste bin. Then download iTunes and reinstall-you don't have to remove anything-just reinstall. This will put back a newer //System/Library/Extensions/AppleUSBEthernetHost.kext file dated 2014. After this, restart your computer and it should now work. I checked the personal hotspot connection via my USB cable and this is what I'm using now writing and posting this. So Good luck. Hopefully Apple will fix this bug in the next update.

Parallels 9  also causes this error to occur after iTunes 11.4 is installed.    I assume it's also leveraging the kext for it's own access.

not sure yet if it affects anything in the Windows 7 VM interface with OS X / Mac.

Thanks for this..

And Parallels 9 doesn't flag an iPhone being connected to the hosting Mac anymore (It used to ask how to handle the new USB connection)