Well Im having a hell of a time trying to softmod my xbox. Ive read that if the usb is not supported that the xbox screen flashes at the memory screen?

Mine just does nothing. Its like the usb is not even plugged in. I checked the connections on the usb/ xbox adapter and theyre fine.

Is there any way I can format the usb drive to FATX manually? would that help?

Or if a usb drive is not compatible, its just not compatible and I should give up?

Unfortunately the anwer is yes. There are plenty of 'my USB flash drive doesn't work' threads here if you want further information. Almost none of it is actually helpful because the bottom line is that if it doesn't work there's nothing you can do about it.

If you want to avoid the hassle and frustration of trying to find a working USB device one solution sometimes ignored is get the game save installer/exploit onto your Xbox via a genuine official Xbox memory card (eBay etc). Use that with a USB to Xbox controller adapter to connect to your PC/Xplorer360.