When you first plug it into your computer, the "add new hardware wizard" should appear. If it doesn't, I'd suspect a problem in your wiring.
I think the important thing is that your main four wires are not in contact with any other wires. Also, make sure the yellow wire is not touching any other wires. As far as the outer layer of wire, it doesn't need to be connected but it wouldn't hurt it to be.
You can get a cheap soldering iron for a dollar and its pretty easy to solder wires.