The ominous Pin #5 is usually the ID Pin and does not travel through the cable. If I remember correctly, this pin is usually shorted to ground, indicating a device device or open, indicating a host device.
In other words: This pin decides if the device which is connected plays the host or device role.
If you use the other 4 pins, make sure that no user will really use a "normal" USB cable (and they will) as your device will most likely get 5V on the power pin (which is probably not what you want).
PJCs solution is in my opinion a good one (but requires you to change the board)
The generic answer to this question is yes, the VBUS (+5V from cable) must be connected to the device even if it is self-powered. The reason is as follows:
To start the connect process on host side, the device must pull up D+ (in case of FS/HS mode), or D- (in case of LS device).
However, USB specifications have a mandatory requirement that no USB device should source any current on any interface pin unless it is connected to a cable, see section 7.1.5.1, which reads,
The voltage source on the pull-up resistor must be derived from or
controlled by the power supplied on the USB cable such that when VBUS
is removed, the pull-up resistor does not supply current on the data
line to which it is attached.
If a USB device doesn't have this control, one of data lines will be a source of current. Premature assertion of pull-ups were a source of problems for some legacy USB hosts. That's why this rule was instituted, and there is a special test for this in USB-IF certification program.
Therefore, the USB VBUS is an important "side-band" signal in USB connect protocol. As such, normal USB device ICs do have a separate input pin to sense the presence of USB host. Some IC manufacturers (e.g. FT232H, MCP2221, etc.) skip on this requirement, assuming that their chip will be solely used in bus-powered configuration, where the pull-up control requirement is automatically satisfied. However, when designing these chips into self-powered designs, some extra circuit efforts are needed to link the enabling of pull-ups with presence of VBUS on the USB port.
Regarding the USB connect "handshake" protocol, USB doesn't rely on current drawn from VBUS. The protocol is this: Host port must have VBUS active; VBUS is connected to device; device sees the VBUS and pulls-up 1.5k on one of D+/D- wires; host sees this connect, and after a 100ms delay asserts USB_RESET signaling (SE0 etc.).
Best Answer
If you look for a solution to interface your embedded controller to a computer with only USB ports, I can highly recommend an USB to RS232 bridge chip. I use the FT232 chip from FTDI in my embedded systems. FTDI not only provide the chip but also a driver for it. In your computer the chip will be detected as a good old COM port, just as the old ones with all the handshaking etc... In the controller end the chip outputs TTL RS232, SPI or I2C depending on your choice of chip.
If you are looking for parallel access, FTDI also have a USB to parallel chip.
The driver can be customized if you want too and is free. It works on Windows, MAC, Linux and Windows CE.
Now, if you only want to have a traditional 9-Pin COM port, there are several USB to RS232 converters out there.