Does the drive contain a "virtual CD-ROM" partition? Some USB hard drive have a read-only partition that contains software and documentation, which autoruns when connected. If it does, you loader may be configured to use that partition instead of the writable partition.
I know with CFG I can get a reading of the available space on the drive. Can you get that with USB Loader GX or WiiFlow? Do the games begin to rip and then freeze at any point between 0-100 percent? Or does it freeze up immediately?
Can you load the games from the disc channel?