I'm not a Win 8 user, so I'm just guessing here. Which selection are you using in the first screen? The subsequent screen shots look like setup for Win 8.1. Typically, with a recovery disk, you select the drive (in your case, a USB flash drive), in a boot device selection menu (if you're in the right place, probably the first selection, "Windows boot manager"). If the flash drive is attached and functional, it should appear in the list of boot devices (you boot it, not open it after booting from the hard disk). The next set of choices you see would be recovery options. I would think that if the flash drive is detected and you select it and then it doesn't work (your suggestion that the flash drive might be bad), it would either produce an error message or hang the computer; it wouldn't revert back to a setup procedure. Maybe it's totally different in Win 8, in which case, hopefully, someone who is familiar with it will respond.