It's easier to try troubleshooting this sort of thing if you're a lot more specific; this is what I think you're trying to say:

Is Diablo available for the N800? The reason I'm asking is I'd previously updated successfully to OS2008 (Chinook) but when I go to update to Diablo, the Nokia Internet Tablet Software Update Wizard says "Status: Device not found. Searching...", then says "Status: Device not found. If USB logo is not displayed within 5 seconds of switching on the device: Release the swap key. Switch off the device. Try again."
Even though the USB logo is in the right hand corner of the screen. My N800 has never been dropped and I mainly use it for the internet. This is the first major problem I've had with it since I bought it. Any advice please?

Now I've highlighted all the guesswork here; I could be wrong in any of those, but if those are correct, then it's acting exactly the same as mine with no device connected.

I'd check that you can access the SD cards in Windows Explorer (with the N800 booted normally, but without disturbing the USB connections), and if that fails too, check all the USB cables, any hubs, try a different port on the root hub, etc.

If those guesses don't correspond to what you're seeing, then I guess you'll have to be more specific.