There might be a problem with the USB part of the flash drive. If you have a newer computer you could use a regular Ethernet cable to connect to the ps3 directly.
If you have the latest version if Luma installed then updating the official firmware should cause no issues. Maybe someone else can answer your second question.
Do you have a computer to connect to with the Ethernet cable? If you have a newer computer you won't need a crossover ethernet cable. You might try a ftp program on the computer.
@Xdqwerty, Osu! Tatakae! Ouendan! is the Japanese version of the game, different settings/characters/songs but otherwise identical mechanics. I played that before I knew about Elite Beat Agents lol. Both fantastic games https://en.wikipedia.org/wiki/Osu!_Tatakae!_Ouendan