I have installed kernel
2.6.1-rc1
module-init-tools 0.9.14
udev-012
hotplug 20030805

cat /proc/sys/kernel/hotplug says /sbin/hotplug which is in place.

if i switch on the usb storage device then
kernel:

drivers/usb/core/usb.c: usb_hotplug
hub 1-0:1.0: port 1 enable change, status 100
drivers/usb/host/uhci-hcd.c: 1400: suspend_hc
hub 1-0:1.0: port 1, status 101, change 1, 12 Mb/s
drivers/usb/host/uhci-hcd.c: 1400: wakeup_hc
hub 1-0:1.0: debounce: port 1: delay 100ms stable 4 status 0x101
hub 1-0:1.0: new USB device on port 1, assigned address 6
usb 1-1: new device strings: Mfr=56, Product=78, SerialNumber=100
drivers/usb/core/message.c: USB device number 6 default language ID 0x409
usb 1-1: Product: USB2.0 Storage Device
usb 1-1: Manufacturer: Cypress Semiconductor
usb 1-1: SerialNumber: 000000000383
drivers/usb/core/usb.c: usb_hotplug
usb 1-1: registering 1-1:1.0 (config #1, interface 0)
drivers/usb/core/usb.c: usb_hotplug
usb-storage 1-1:1.0: usb_probe_interface
usb-storage 1-1:1.0: usb_probe_interface - got id
usb-storage: USB Mass Storage device detected
usb-storage: act_altsetting is 0, id_index is 113
usb-storage: -- associate_dev
usb-storage: Transport: Bulk
usb-storage: Protocol: Transparent SCSI
usb-storage: Endpoints: In: 0xc2b9c194 Out: 0xc2b9c180 Int: 0x00000000 (Period 0)
usb-storage: usb_stor_control_msg: rq=fe rqtype=a1 value=0000 index=00 len=1
usb-storage: GetMaxLUN command result is -32, data is 85
usb-storage: *** thread sleeping.
scsi4 : SCSI emulation for USB Mass Storage devices
usb-storage: queuecommand called
usb-storage: *** thread awakened.
usb-storage: Command INQUIRY (6 bytes)
usb-storage: 12 00 00 00 24 00
usb-storage: Bulk Command S 0x43425355 T 0x2d L 36 F 128 Trg 0 LUN 0 CL 6
usb-storage: usb_stor_bulk_transfer_buf: xfer 31 bytes
usb-storage: Status code 0; transferred 31/31
usb-storage: -- transfer complete
usb-storage: Bulk command transfer result=0
usb-storage: usb_stor_bulk_transfer_buf: xfer 36 bytes
usb-storage: Status code 0; transferred 36/36
usb-storage: -- transfer complete
usb-storage: Bulk data transfer result 0x0
usb-storage: Attempting to get CSW...
usb-storage: usb_stor_bulk_transfer_buf: xfer 13 bytes
usb-storage: Status code 0; transferred 13/13
usb-storage: -- transfer complete
usb-storage: Bulk status result = 0
usb-storage: Bulk Status S 0x53425355 T 0x2d R 0 Stat 0x0
usb-storage: Fixing INQUIRY data to show SCSI rev 2 - was 0
usb-storage: scsi cmd done, result=0x0
usb-storage: *** thread sleeping.
Vendor: ST320014 Model: A Rev: 0 0
Type: Direct-Access ANSI SCSI revision: 02
usb-storage: queuecommand called
usb-storage: *** thread awakened.
usb-storage: Command TEST_UNIT_READY (6 bytes)
usb-storage: 00 00 00 00 00 00
usb-storage: Bulk Command S 0x43425355 T 0x2e L 0 F 0 Trg 0 LUN 0 CL 6
usb-storage: usb_stor_bulk_transfer_buf: xfer 31 bytes
usb-storage: Status code 0; transferred 31/31
usb-storage: -- transfer complete
usb-storage: Bulk command transfer result=0
usb-storage: Attempting to get CSW...
usb-storage: usb_stor_bulk_transfer_buf: xfer 13 bytes
usb-storage: Status code 0; transferred 13/13
usb-storage: -- transfer complete
usb-storage: Bulk status result = 0
usb-storage: Bulk Status S 0x53425355 T 0x2e R 0 Stat 0x0
usb-storage: scsi cmd done, result=0x0
usb-storage: *** thread sleeping.
usb-storage: queuecommand called
usb-storage: *** thread awakened.
usb-storage: Command READ_CAPACITY (10 bytes)
usb-storage: 25 00 00 00 00 00 00 00 00 00
usb-storage: Bulk Command S 0x43425355 T 0x2f L 8 F 128 Trg 0 LUN 0 CL 10
usb-storage: usb_stor_bulk_transfer_buf: xfer 31 bytes
usb-storage: Status code 0; transferred 31/31
usb-storage: -- transfer complete
usb-storage: Bulk command transfer result=0
usb-storage: usb_stor_bulk_transfer_buf: xfer 8 bytes
usb-storage: Status code 0; transferred 8/8
usb-storage: -- transfer complete
usb-storage: Bulk data transfer result 0x0
usb-storage: Attempting to get CSW...
usb-storage: usb_stor_bulk_transfer_buf: xfer 13 bytes
usb-storage: Status code 0; transferred 13/13
usb-storage: -- transfer complete
usb-storage: Bulk status result = 0
usb-storage: Bulk Status S 0x53425355 T 0x2f R 0 Stat 0x0
usb-storage: scsi cmd done, result=0x0
usb-storage: *** thread sleeping.
SCSI device sda: 39102336 512-byte hdwr sectors (20020 MB)
sda: assuming drive cache: write through
sda:<7>usb-storage: queuecommand called
usb-storage: *** thread awakened.
usb-storage: Command READ_10 (10 bytes)
usb-storage: 28 00 00 00 00 00 00 00 08 00
usb-storage: Bulk Command S 0x43425355 T 0x30 L 4096 F 128 Trg 0 LUN 0 CL 10
usb-storage: usb_stor_bulk_transfer_buf: xfer 31 bytes
usb-storage: Status code 0; transferred 31/31
usb-storage: -- transfer complete
usb-storage: Bulk command transfer result=0
usb-storage: usb_stor_bulk_transfer_sglist: xfer 4096 bytes, 1 entries
usb-storage: Status code 0; transferred 4096/4096
usb-storage: -- transfer complete
usb-storage: Bulk data transfer result 0x0
usb-storage: Attempting to get CSW...
usb-storage: usb_stor_bulk_transfer_buf: xfer 13 bytes
usb-storage: Status code 0; transferred 13/13
usb-storage: -- transfer complete
usb-storage: Bulk status result = 0
usb-storage: Bulk Status S 0x53425355 T 0x30 R 0 Stat 0x0
usb-storage: scsi cmd done, result=0x0
usb-storage: *** thread sleeping.
sda1
Attached scsi disk sda at scsi4, channel 0, id 0, lun 0
Attached scsi generic sg0 at scsi4, channel 0, id 0, lun 0, type 0
usb-storage: queuecommand called
usb-storage: *** thread awakened.
usb-storage: Bad target number (1:0)
usb-storage: scsi cmd done, result=0x40000

.config:

# Bus options (PCI, PCMCIA, EISA, MCA, ISA)
#
CONFIG_PCI=y
# CONFIG_PCI_GOBIOS is not set
# CONFIG_PCI_GODIRECT is not set
CONFIG_PCI_GOANY=y
CONFIG_PCI_BIOS=y
CONFIG_PCI_DIRECT=y
# CONFIG_PCI_USE_VECTOR is not set
CONFIG_PCI_LEGACY_PROC=y
CONFIG_PCI_NAMES=y
# CONFIG_ISA is not set
# CONFIG_MCA is not set
# CONFIG_SCx200 is not set
CONFIG_HOTPLUG=y

#
# PCMCIA/CardBus support
#
CONFIG_PCMCIA=m
CONFIG_YENTA=m
CONFIG_CARDBUS=y
CONFIG_I82092=m
CONFIG_TCIC=m

#
# PCI Hotplug Support
#
CONFIG_HOTPLUG_PCI=m
# CONFIG_HOTPLUG_PCI_FAKE is not set
# CONFIG_HOTPLUG_PCI_COMPAQ is not set
# CONFIG_HOTPLUG_PCI_IBM is not set
# CONFIG_HOTPLUG_PCI_ACPI is not set
# CONFIG_HOTPLUG_PCI_CPCI is not set

#
# Executable file formats
#
CONFIG_BINFMT_ELF=y
CONFIG_BINFMT_AOUT=y
CONFIG_BINFMT_MISC=y