On the dialogue where "SD-Card" is shown first, just press the "LEFT / RIGHT" buttons to select "USB" device.
Edit: Got all games working except Strife from SD card.
So SD cards ARE compatible.
Also pressing left and right on the classic controller just scrolls to the end of the file list, small bug? ( Classic controller PRO )
The loader verifies the wad as compatible but, upon loading exit and mentions that psp...etc is'nt correct.
Is this the only game that need to be loaded from usb?