Install Frog ASPI
You'll quickly find out of Basilisk II will work with that ASPI. With XP and older, use the ASPI from Adaptech.
Then see if your USB drive shows up in the SCSI tab. If you get the message asking if you want to initialize the drive, then it worked.
HFS can go up to 4 gig in System 7.5.x and up, though it's very inefficient over 2 gig volume size.
Make sure the USB drive is formatted FAT16 if you want to reformat it as HFS. If you're running 8.1, try formatting your USB drive as FAT32 and initializing it to HFS+ in Basilisk.
Make sure you do NOT have windows Explorer showing the contents of the USB drive before launching Basilisk.
If you're running a defragmenter or antivirus or any other program that scans removable drives, Unlocker can pry it loose.
I use O&O Defrag and it's always grabbing my USB drives and refusing to let go when I use the Safely Remove menu option. So I rightclick, click Unlocker and force it to let go.