It sounds like toast to me. (that is, my best guess is that the drive is no good)
Is there any data on the drive that you need to recover, or can you just get a new one?
The best USB test software is h2testw. You can find a link to it here: http://fightflashfraud.wordpress.com/2008/11/24/h2testw-gold-standard-in-detecting-fake-capacity-flash/