Can you retrieve the /etc/mtab file over FTP while the USB device is plugged in and post it? Then change directory to /media and see if the USB disk is there (called drive1 or something similar) and cd into that and see if you can list the files there - could you post the output of that too?
/ect/mtab
rootfs / rootfs rw 0 0
/dev/root / squashfs ro 0 0
proc /proc proc rw 0 0
sysfs /sys sysfs rw 0 0
usbfs /proc/bus/usb usbfs rw 0 0
devpts /dev/pts devpts rw 0 0
tmpfs /tmp tmpfs rw 0 0
tmpfs /media tmpfs rw 0 0
/dev/mtdblock1 /var/lib/humaxtv jffs2 rw 0 0
/dev/mtdblock2 /var/lib/humaxtv_backup jffs2 rw 0 0
/dev/sda1 /mnt/hd1 ext3 rw,data=ordered 0 0
/dev/sda2 /mnt/hd2 ext3 rw,data=ordered 0 0
/dev/sda3 /mnt/hd3 ext3 rw,data=ordered 0 0
/dev/sdb1 /media/drive1 vfat rw,fmask=0022,dmask=0022,codepage=cp437,iocharset=utf8,shortname=mixed 0 0
FTP directory /media/drive1/
To view this FTP site in Windows Explorer, click Page, and then click Open FTP Site in Windows Explorer.
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Up to higher level directory
01/01/2011 12:00AM Directory .
05/13/2011 04:41PM Directory ..
05/13/2011 06:17PM Directory Official HDF
05/13/2011 06:18PM Directory Custom HDF
05/12/2011 10:40PM 6,590 utelnetd_0.1.9_mipsel.opk.auto
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The customised HDF only includes part of the software; the part that I've modified. You should install the official one first before the modified one to make sure everything matches.
I saved the official one over the custom then put the custom back over it. Still no USB installs.