What (internet page) set of instructions did you follow to create the
USB key?
The ones I used (which were not on the atv-bootloader website) worked
flawlessly and required absolutely no tweaking on my side.
I put it in, booted.
Pulled it out.
Rebooted and a new menu item was available on the ATV, which allowed
me to download the new XBMC release.
Here is the site I used:
http://code.google.com/p/atvusb-creator/
HTH,
Dave