USB booting :: Not a bootable device

I have a Kingston DataTraveler 512MB.

First I formatted it with 1 partition FAT16 with bootable flag. Then I installed DSL using dsl-usbinstall. Then I set my BIOS to boot from USB (it recognised the device a kingston)

Now when I try to boot from either of my machines I get "This is not a bootable device. Please insert a bootable floppy and press any key to continue"

What am I doing wrong here?

Using the method of extracting the ISO and copying to the USB stick in Windows results in the same problem.

OK, so now I copied the boot sector from a floppy and still get the same problem. Are some USB drives just not bootable?

original here.