If i understand thing right you use a scsi configuration.
You have only one harddisk and this is a scsi disk...right ?

Before you blame the scsi controller u should try to boot without the scsi controller and harddisk.
If the USB memorystick still doesn't function then the problem lays elsewhere.

If the memorystick does function after testing without scsi then there's your problem.
Make sure evreything is alright, terminators installed etc.