First, let me reiterate Fred's statement that there is a newer forum; this one is being archived so there is very little activity here. Please repost at
to continue this discussion.
Second, a genuine 128GB drive should be able to hold at least 100 full CDs even if they have not been compressed to FLAC or MP3, so unless your USB drive is a fake -- and there are a LOT of fakes out there -- space is not that much of an issue. And if nothing at all is being copied, then there's a different problem, because running out of space requires that something has been copied.
Yes, try formatting the drive on the B2. Remember that formatting will erase anything already on the drive, so copy off anything that is there now before you do the format.
The function you want is Export Playlist (on the Playlist menu), not Save Playlists.
Please do not report your results here; do so on the new forum. Thanks -- m.