I have (nearly) exactly the same problem.
In my case I am running DSL as the only system on an old Acer - not as a virtual machine.
I have tried fat32 and ext3 formats on the USB stick - all to no avail.
Typical message from mount command " mount -v /dev/sda /mnt/sda" (I left out the filesystem type so mount checks all types in /etc/filesystems) is :-
"mount: relocation error: mount: undefined symbol: blkid_known_fstype"
The usb stick is readable on several other Linux systems so the stick is fine.
Any suggestions welcome!
There was a problem with a 2GB usb stick that I was using. It was pre-formatted when bought to have two partitions; the first of about 1mb, the second with the rest of the 2GB. This stick cannot be seen by DSL.
Other usb sticks are fine - though the device name of the usb stick can be variable!
I put the stick in a usb port and use "dmesg" from a shell to see what device it is seen as (usually /dev/sdc1).
I have created an empty partition on the DSL computer as "/usbstick".
I then simply mount the usb device to the partition with the command "sudo mount /dev/sdc1 /usbstick"
After using the usb stick it needs to be unmounted with command "sudo umount /dev/sdc1" - usually the system says that the device is busy and can't be unmounted - I ignore this and remove the stick anyway.
I can see the usb stick now.