Are you admin on your windows? about the only thing I can think of that might be your issue.
If you are still having no joy then grab the usb tool from here and do it that way instead, still can't see any reason the other way is causing an issue.
I am assuming you are opening a command prompt in windows itself, and not booting up into it.
The fact that the usb drive is not even recognised is obviously an issue, I assume here that the usb drive is plugged in before you start the command prompt part?
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