|USB 2.0 devices will generally revert to 1.0 if the port only supports 1.0. I've never had a device fail from using 1.0. Especially on a flash drive, the only effect should be slower performance.|
It's possible your computer doesn't recognize the flash drive, period. In this case, download the USB Mass Storage Device driver. This install may require a reboot.
This file worked with a SanDisk 8GB Cruzer that "required" Windows 2000 or later. This file contains updated components from 2007 that allows Windows 98 to detect media card readers, cameras, etc. No issues after installing NUSB and Windows 98 detected the flash drive.
NUSB 3.3: http://www.mdgx.com/web.htm#NUS
iMac G5 1.8GHz, 2GB RAM, 160GB, Mac OS X Leopard 10.5.8, SuperDrive
PowerBook G4 1.33GHz, 1.25GB RAM, 60GB, Mac OS X Tiger 10.4.11, SuperDrive