Hmm, not one I have seen before. Maybe my key has different internals to yours. Have you tried any other keys or different terminals as it seams strange both would not work.
In my tests I also used a Lexar Jump Drive and Kingston data traveller,
The trick is to either : use a USB drive which does not have U3 or some other CDFS partition on it that appears as a CDROM in Windows.
or: remove U3 from your Cruzer. I know of no solution at this time to remove the CDFS partition from a Transcend drive, but like ThinkThin said, Cruzer should work (once you remove u3)