There are 2 versions of kies. One for devices running 4.3 or later, one for earlier devices. Are you sure you're using the correct one?
That's all I got.

 

I tried just before posting my last post and had no issues. Are you sure your usb port and cable are in good working order? Perhaps you could try a different port and cable?
I know, I'm grasping at straws but it's worth a shot.

 

I found this at another Android site in a discussion of your exact issue:

I would like to point something out here. I do believe there is a difference. Some cables, I believe, are charging cables only whereas others are charging and data transfer cables. I had this problem recently when my PC wasn't recognizing the S4. I have a small collection of cables around the house, and I tend to inadvertently mix them up. Anyway, I could not get the S4 to load as a disk drive using the nearest cable. As it turns out, that cable was the USB-to-microUSB charging cable for my Bluetooth headphones. I swapped that for the cable that came with my Nexus 7 tablet and VOILA! PC immediately loaded the S4 as a disk drive.

So, yes, sometimes it really might be the cable that's an issue.

 

Once you have downloaded KIES to your computer, do not do any updates. I have found that doing the updates right after installation seems to freeze things up.

 

Wait a sec, sreum came up with the don't do updates idea and it's a good one!
I've also read make sure that you're phone isn't connected when you do the installation.
Good luck, I hope one of these suggestions works!