I just updated my SM to 2.61, and I thought I'd post one other factor: USB memory size. I had to go through 5 sticks until 1 worked. All were formatted to FAT32, all were 'ejected' from the PC, all had the same .BIN file. Only one was recognized by the pin.

2 main differences regarding the one that worked:
1. it was 1GB in size (where all others were 4+GB)
2. it had a light indicator (none of the others had it)

I doubt #2 is relevant, but thought I'd pass this on in case someone is pulling their hair out.