Atmosphere 0.8.9, firmware 8.0.1, i use NS USB loader, i have the required space, and the card is on FAT32.more info
cfw , firmware version , how you install , have you the required space in you sd card ?
as i don't use USB installation , i can't help.Atmosphere 0.8.9, firmware 8.0.1, i use NS USB loader, i have the required space, and the card is on FAT32.