Firstly, welcome to androidforums.com!

It seems that i'm not the only one with this problem.

Anyway, I think this has something to do with the
LGE Virtual Modem.
1. Go to then Device Manager in Windows. (right-click computer --> Properties --> Device Manager for me in Vista)
2. Double-click "Modems". You should see something like this:
3. Right-click on the "LGE Virtual Modem" and select disable.
4. Try plugging it in now, does your wifi dongle stop working?
5a. If yes, then try restarting the computer.
5b. If no, then you've fixed the problem!

Hope this helps.

- x-treme