Are you using the correct USB slot (the bottom one while the Wii is lying horizontal)?
and what exactly do you mean "with one directory WBFS"?
You mean one partition? Format the entire drive wbfs and see if that works.
Something sounds jacked up if it quit reading burned games out of nowhere though. That is odd. If it was a drive format issue it would just simply not show any games, it should not just freeze on you.
What happens if you load a USB loader with nothing plugged into your USB slot?