I really don't have an answer for that problem, because it shouldn't be happening! For some reason, PowerChurch treated your USB drive like a floppy. I just looked through the code for this with one of the developers, and PowerChurch only deletes the contents of a drive in very specific circumstances. If your USB drive is less than 3MB in total space, then that may happen, but I don't think they made any that small. The fact that it worked the 2nd time is just weird. That's how it's supposed to work. It may be a problem with the name of the volume. That's valuable information, and we'll check that out.
Does the problem exist after rebooting with the USB drive disconnected?
Confession time: We didn't originally design PowerChurch to work specifically with USB drives like this, it just sort of worked. We eventually got a couple here and tried them out with varying degrees of success. We have noticed that some are recognized by Windows as removable media, and those work. Some are recognized as hard drives and those don't. Most of the folks we've talked to who use them seem to have success with them. Basically, the fact that they work at all is technically a bug, but it's one we have opted not to fix - for obvious reasons. Any information about failures is useful so we can make the backup feature more robust. Eventually, that whole function should be rewritten, but that's not on the table for the short term. Keep letting us know about this stuff, and we'll check it out.
EDIT: Jeff beat me to the punch!