I guess you never gave enough instruction as to how you should implement the USB. When I loaded the latest WIP, from a floppy, I put in the thumb drive, and tried cd d:, and cd e:, it stated no such drive. This was tested on my P-III laptop, in the bios it does not have a selection for a USB-Floppy, or a USB-CDROM, or USB-FLASH, or ...
Now, with the USB implemented on the freeDOS setup, with the Panasonic driver, I have to have the thumb drive inserted before boot up, in order for it to work. Once booted, it works pretty good.