I have seen a very similar problem after putting my flash drive into a winblows machine and copying some files on it. When I came home and put the drive into my eCS, the drive has not been accepted and recognized. The "Properties" dialog thought that the dirive is a diskette. It was also a 512 MB drive formatted as FAT16.
I have used GParted (a Linux partition editor). I deleted the bad partition on the flash drive, created a new FAT16 partition, and reformatted the drive. The drive started working. Later on, there were no problems with transferring files using the drive. Most likely, winblows put something more than the wanted files on the drive.
512 MB and FAT16 should be okay for WSeB. (1) Reformat, (2) make sure that your OS/2 machine has no problems with the drive, and (3) use the drive elsewhere. You will see whether the probles persist. GParted is a free of charge bootable ISO with Gnome environment and the partition editor. GParted is a "PM", not commad-line, app.