I used the 2 CD install method to get LMCE going. It all worked flawlessly. Then I decided to connect a MCEUSB2 infrared controller using the Microsoft remote. When I connected the controller some activity was going on to install the new software for it and I received a notification that MCEUSB2 now was installed. It didn't however.
Diving into the modules directory, the MCEUSB2 module wasn't installed in the correct version of the OS. With the Kubunto live CD kernel 2.6.15 is installed. During the installation of LMCE a newer version (2.6.16) is installed. The MCEUSB2 module is present in the modules directory of the 2.6.15 directory but is not present in the modules directory of the 2.6.15 directory. copying the MCEUSB2 module to the 2.6.15 directory fixed the problem in my case. After a reload I was able to use the remote to control my Mediacenter.
Cheers
Internix