Hi John,
Sometimes the iFly can be very picky about seeing a usb drive. Because they get bounced from device to device, managed by different computers, and removed and re-inserted at in-opportune moments, they sometimes become hard to recognize. Reformatting the flash drive will often clean and reorganize the storage space so it more easily detected by the iFly.
Also.. after a download, open the flash drive and confirm the iflyupdatepackage.zip is there, and did not go to another location on your computer. Any other file names on the flash drive will be ignored.
Last Note.. The iFly seems to make a more robust effort to find the flash drive during the boot-up process, so inserting the flash drive in the iFly, then plugging in the power is the most consistent method. You will be prompted with "An Update Package has been Found, would you like to update your device?" Follow the prompts from there.
If you continue having problems, please give support a call so we can trouble-shoot further on the phone.
Ed