Yes it support all USB setup packets.
I used USB monitoring tool and found that descriptor is correctly configured with bulk transfer option.
One more difference i found that there is continuous signals on USB_DM port of MCF52259 after every 1msec when connected to windows7 but its not the case with windows XP. these signals are observed only for few time on windows XP.
These signals might be SOF signals.
Still I have not got the solution for my problem, will u please guide me further.
OBSERVATION: if there any communication on other usb port driven by same usb controller whose one port is connected to my controller mcf52259, my device starts responding to application software on windows7 PC. but there is sequence first connect mcf52259 and than other device to other usb port.
what kind of firmware changes I need to do so my device communicate with windows7 PC.