In theory it is possible that the usb port is defective, but in most occasions it is something with the usb stick.
Please read this:
http://www.mede8erforum.com/index.php/topic,46.0.htmlAnd look at the remarks regarding usb sticks.
What type (Brand/size) stick are you using?
Have you tried another one?
Did you redownload the firmware here from the site again?
The problems you see look like a corrupted firmware file or problems with usb stick and therefore unable to update using recovery mode.
The method to do a factory defaults is by loading new firmware using this procedure.
regards,
Maasbommel