[Milhouse]

I don't know why people don't use their Pi to format and prepare their USB sticks - for example:

1. Boot the Pi from an SD card imaged with Raspbian
   
2. Once the Pi has booted, connect with ssh (or type at the console using an attached USB keyboard) - username "pi", password "raspberry".
   
3. Pop in your USB stick, it should be seen as /dev/sda (confirm with dmesg)
   
4. Partition/format the USB memory stick using ext4 (see instructions below)
   
5. Shutdown the Pi
   
6. Reformat your SD card (or use another SD card - it doesn't have to be more than 100MB and they're dirt cheap!) with a single FAT partition and copy across the OpenELEC system files
   
7. Configure disk=/dev/sda1 in cmdline.txt
   
8. Job done - boot OpenELEC with storage on USB
   

Code:

sudo umount /dev/sda[1-2]
sudo parted -s /dev/sda mklabel msdos
sudo parted -s /dev/sda unit cyl mkpart primary ext2 -- 0 -2
sudo mkfs.ext4 -L Storage /dev/sda1