I knew that duct tape is for fixing ski pants but a flash drive?
Sorry, can't resist.
Check the flash. Control panel, Admin tools, Computer management, Disk management - it'll tell you if it's NTFS or FAT format.
If the flash is not formatted as NTFS but FAT the capacity drops like a rock. Google it, I would not be surprised at 1/2 capacity. So maybe 4gig will fit? Can you cleanup the source by some 300meg and try again?