Well make sure you're on rev 829 or newer otherwise usb loader gx won't support FAT. Generally though most people format their drives WBFS and install games using a manager on their computer. This is much more common with usb loader gx and much more efficient as it saves a ton of space on the drive. There is a guide showing how to do this below (usb loading), and the next poster decided to link it again. Follow either.