(1)
(2) Most likely no. It's more something cosmetic. HDDOSD lets you 1) launch your PS2 games from it (instead of launching them from OPL), 2) launch PS2 apps from there (you need to install them in the header's partition, you will have to dedicate 128Mb per app).
Did you keep intact the folder structure of the noobie package when you copy it on USB ? Just extract the archive and copy it as it is on USB.
You can also try this version of the noobie pack : http://www.mediafire.com/file/h3e8cc6y5z8oir4/FMCB1.953_NP.7z
Glad it worked.
The 7GB image is this one : http://psx-scene.com/forums/f153/unofficial-fhdb-1-93-noobie-package-obt-119562/
FHDB version on it is obsolete. It has some PS2 apps (some are obsolete versions) installed into the HDDOSD (waste of 128MB per app -_-). The newbie pack you installed...