This might not be a "real" solution to your problem, but it works for me:
I created a Windows XP Virtual Machine with VMware Player (should also work with the Microsoft Windows XP mode which is actually a Microsoft Virtual PC). I created a network share on my development folder and accessed it from within the virtual machine.
The USB storage can be bound to the virtual machine, so that there is a quite direct access to it. I now move the files from the networt share to the USB mass storage. It works quite nice and the overhead is not that bad. I'm also using this solution for working with my IC programmer which is 10 years old and not in any way supported by Windows 7.
Hope that helps.