Oh ok, looks like it's not liking that USB stick. It was nearly a year ago that I done this but I do remember it being weird about USB sticks - I intentionally got one of the cheap ones that has insides looking like the OEM one. Mine was one of those crap colored plastic ones with the swing around metal cover usually given out as promo/merch.
I'd try another USB stick and potentially see if you can get hooked up to the serial port so that you can see the debug log - it may have some detail on whats going wrong. Also try formatting the drive to FAT32 on your machine before going via the ZD1100 just in case.
The first post on this thread also mentions a specific type of drive, I guess there is every possibility that the system may have been designed around the type of drive Ruckus was intending to use.
Also remember this is option 1 of 2.
As Daniel and tadkasur have mentioned above you may be able to "repair" the OEM USB drive and clone it to a good drive too - I initially tried this but mine was totally dead.