The content of doc/usbkey.txt (release 6.04-pre1) with minor modifications:
The proper mode to boot a USB key drive in is "USB-HDD". That is the ONLY mode in which the C/H/S geometry encoded on the disk itself doesn't have to match what the BIOS thinks it is. Since geometry on USB drives is completely arbitrary, and can vary from BIOS to BIOS, this is the only mode which will work in general.
Some BIOSes have been reported (in particular, certain versions of the Award BIOS) that cannot boot USB keys in "USB-HDD" mode. This is a very serious BIOS bug, but it is unfortunately rather typical of the kind of quality we're seeing out of major BIOS vendors these days. On these BIOSes, you're generally stuck booting them in USB-ZIP mode.
THIS MEANS THE FILESYSTEM IMAGE ON THE DISK HAS TO HAVE A CORRECT ZIPDRIVE-COMPATIBLE GEOMETRY.
A standard zipdrive (both the 100 MB and the 250 MB varieties) have a "geometry" of 64 heads, 32 sectors, and are partitioned devices with a single partition 4 (unlike most other media of this type which uses partition 1). The 100 MB variety has 96 cylinders, and the 250 MB variety has 239 cylinders; but any number of cylinders will do as appropriate for the size device you have. For example, if your device reports when inserted into a Linux system:
usb-storage: device found at 4 Vendor: 32MB Model: HardDrive Rev: 1.88 Type: Direct-Access ANSI SCSI revision: 02 SCSI device sda: 64000 512-byte hdwr sectors (33 MB)
... you would have 64000/(64*32) = 31.25 cylinders; round down to 31.
The script "mkdiskimage", which is supplied with the Syslinux distribution, can be used to initialize USB keys in a Zip-like fashion. To do that, calculate the correct number of cylinders (31 in the example above), and, if your USB key is "/dev/sda" (CHECK THE KERNEL MESSAGES CAREFULLY - IF YOU ENTER THE WRONG DISK DRIVE IT CANNOT BE RECOVERED), run:
mkdiskimage -4 /dev/sda 0 64 32
(The 0 means automatically determine the size of the device, and -4 means mimic a zipdisk by using partition 4.)
Then you should be able to run
... and mount "/dev/sda4" and put your files on it as needed.