mitchb2
Must be an issue with your USB drive. I'm using a Kingston Data Traveler 8GB and have none of the issue you describe. I also have a HP 8GB and it works fine as well. Shuffle ON/OFF works perfectly whether I use voice or the menu and it always remembers where it left off (both the shuffle setting and the specific point in a song).
Maybe you want to try a Master Reset and start over with indexing the flash drive.
2010 Milan, Sync 3.1, non-nav