Strange. Windows 7 recognizes my Arc instantly (though I'm a little wary of the lack of the normal USB mass storage device icon in the systray for safe unmounting :/), without any prompting for drivers or fiddling or anything.
What OS are you using?
Which USB ports are you connecting to and are you using an extension cable to do so? (some devices, I've noticed, only connect properly when done via a single cable, and then only through the rear USB ports)