I have encountered a strange issue this week that is affecting some encryption machines that have this exact USB Stick. Without Encryption installed the stick works as it should, as soon as encryption has been installed the OS wants to format the key everytime it is inserted. Even if you agree to the format the format fails..
Now heres the strange bit.. If you open computer management and select Disk Management, the key opens and you can see the data.. If you then leave Computer Management open you can remove and reinsert the key to the system perfectly fine... If you then close computer management the issue returns...
Windows 7 64bit
Agent 4.8 Patch1
Kingston stick works ok everywhere else, ALL the other sticks I have seen USB2, USB3, ALL sizes all work.. Just this 1 Kingston Datatraveler 100 G3 8GB. (we just happened to buy a load of em)
Cheers up front!
I believe we fixed something similar to what you describe in EEPC 7.0 Patch 3.