My guess is when you did the reformat on your computer that is the problem. Every time I put my thumb drive into my computer it asks me to re-format and my dealer said never to do that or the machine will not be able to read it. My machine came with a thumb drive and I believe it is 1 GB. Told my dealer that I would need a lot more and he said he has seen them hold over 10,000 designs. I know I have at least 500 and it shows it is not even at 2% yet. I have backed up all my designs on another thumb drive and I can store all my stuff there and on my machine so if the one for my machine gets too full then I can remove items without concern.
Also, so that I can find my designs easier I do make folders. My dealer recommended that when I first got my machine and at first I thought I would ever have that many designs. Now I am so glad I do it.