What format is the Thumb Drive? I use many of them as they're great to provide Windows Users with the Power of Linux.
Did you try Chrisz suggestions. I like the Bigger Ones now and partition with several formats for varied and obvious usages.
Had a Ext3 that had been created within another Distro as root, so it wouldn't write in another until it was mounted and given
some permission, so they can be tricky, especially after doing several formats or wipes, as they are delicate in many ways, but I'm
certain you'll get it solved, as these handy portables and running a few virtual OS is a good way to go.