Hi Doug, no startup.cmd acting, the autostart of vboxservice.exe in Startup folder gives same effect after having checked as told in a previous answer, but if you feel that might be the problem, will revert again in a startup.cmd script.
I would put it back into STARTUP.CMD, since that is where it was designed to go. I don't know what might happen if you start it in the startup folder. It may depend on the startup order, and that may not be what you think it is.
Okay, let's start with the USB lines, in CONFIG.SYS. After properly sorting what you posted, I see this:
REM [USB section
BASEDEV=USBOHCD.SYS
REM BASEDEV=USBUHCD.SYS
BASEDEV=USBEHCD.SYS
BASEDEV=USBD.SYS
BASEDEV=USBD.SYS
REM BASEDEV=USBHID.SYS
DEVICE=C:\OS2\BOOT\USBPRT.SYS
REM DEVICE=C:\OS2\BOOT\USBMOUSE.SYS
rem DEVICE=C:\OS2\BOOT\USBMOUSE.SYS
REM DEVICE=C:\OS2\BOOT\USBKBD.SYS
rem DEVICE=C:\OS2\BOOT\USBKBD.SYS
DEVICE=C:\OS2\APPS\tame\usbresmg.sys
BASEDEV=USBMSD.ADD /REMOVABLES:8 /FLOPPIES:0 /CDS:1
REM DEVICE=C:\OS2\BOOT\USBCOM.SYS
The most obvious problem, is that you have "BASEDEV=USBD.SYS" twice. I am not sure what that might do.
You also have: "BASEDEV=USBMSD.ADD /REMOVABLES:8 /FLOPPIES:0 /CDS:1", which is where the second CD comes from. I suggest changing that to: "BASEDEV=USBMSD.ADD /REMOVABLES:8 /FLOPPIES:0" (remove "/CDS:1") . If you do need a USB CD/DVD drive, there is another device line that does it, but leave that until you get it working. No point in complicating things.
The line: "DEVICE=C:\OS2\APPS\tame\usbresmg.sys" is probably not needed, and a version that is in the tame directory may be old, and not compatible with later versions of the USB driver. REM it, for now, and try it later, if you really need it.
There are other things that probably need to be tweaked, but I don't see anything else that might affect mounting a USB stick.
Sort done by Logical Config.Sys Sort:
http://hobbes.nmsu.edu/download/pub/os2/util/config/lcss-0-6-5.wpi. Be sure to READ the instructions, if you decide to use it. It sorts Config.Sys so that humans, as well as machines, can read it. It makes sure that the lines are in the correct order, and does some commenting, but does no validation, or parameter checking.