Dennis, wow, that was a lot of information at one setting. Let's see how well I do at supplying the info you need for the next step.
Since I haven't saved any data in the U3 application and I don't really use it anyway, I would be fine with losing U3 and having a 16gb data disk, as long as it worked okay.
7-zip is not extracting anything from the drive. As a matter of fact when I do select the drive and click extract I get a message that says I must select the files I wish to extract. However, there are no files listed to select.
Lastly, I think, yes, the flash drive does still show up as a flash drive and a CDRom.