This uprade consists of replacing the board inside the memory unit with one of a USB flash drive.
The memory unit of the xbox 360 uses 3.3 v and a usb device uses 5v but because the memory and ic of the usb flash drive uses 3.3v it simply works.
Now I don't know if this work works with any usb...
I have the same problem with unlaunch 2.0 .When i try to load the cartridge with unlaunch he frozen but when i load the cartridge in dsi menu or twlmenu++ it work. I think this is a problem with unlaunch.