Following up on my own idea below, I disabled CDROM autorun in the
Registry. Now I can get as far as seeing the root directory of the USB
stick. If I try to open any file or subfolder, I get the i/o error.
The USB stick appears the same in Disk Management as described below.
I can do a shutdown - safely remove hardware on the stick without any
problem once I close the i/o error message window.