Does other software see it on your computer? Do you hear a little bleep when you connect it? Does your computer prompt you to start an app (such as MSS)? If it does not, then there is something either wrong with your computer (USB port) or your USB cable or the part of the SL2 connecting to the USB cable. I know I had issues with mine once and it turned out I had a bad USB port on my computer.
I haven't used MSS in months - I've been using windows media player to put music onto my S2 - so I tried again tonight. MSS version 188.8.131.52972 recognized my S2 the first time I used the sync button (on my old SL100 home dock).
If you have a memory card, the best bet is to take the card out and sync with the card directly. However, if you want to put MP3s in the SL internal memory, I believe you will need to toggle the sync option to put all music in a single directory. If you don't, the SL2 will re-orginize it and then when you sync again, WMP won't recognize that you have the song on the SL2 and will sync it again. Setting the option keeps WMP from becoming confused with the SL2 behaviour.