sda1 is your USB thumbdrive, BTW, as you suspected.

If you want to leave 60 MB of free space, I suppose you can, but that just means that it can't be used by anything.

If you created an ext2 partition, and then formatted it as ext2 afterwards, then I don't know what more you can do with Qtparted. Must be something else.

Try rebooting. If you just created it, then your fstab is not going to recognize that it exists unless you modify the fstab or reboot and let it be autodetected. Since you are dealing with live CD, you really can't edit. I'm sure one of these smart folks could tell you what cryptic combination of of letters, numbers and symbols to put in at the console, but if it were me, I'd just reboot. When it comes up again, it should appear as a hd icon on your desktop. Be sure to make it writable before you create the PH

jd