I had a lot more success getting flash drives bootable by loading a random ISO to them using unetbootin and then formatting them with
sudo mkfs.vfat -n UNRAID /dev/sde1[color=red][b] ##### IMPORTANT - replace sde1 with the correct device ########[/b][/color]
You might want to test booting the ISO first from the flash drive before installing unRaid. (If it still fail to work, some other, yet to be figured out, tricks might be needed...)
After formatting the drive,
sudo syslinux /dev/sde1
followed by copying unRaid to it should work....
If you then get a menu.c32 error on booting, you are probably using a newer version of sysLinux and editing syslinux.cfg to have the first line read "default unRAID OS" should work... (replacing menu.c32 with the version bundled with syslinux works as well (It is in /usr/lib/syslinux/menu.c32 on my Ubuntu)) (with the modified "default" line you need to press escape quickly if you want to use memtest)
(I had limited success using syslinux 4.x / makebootfat only, unetbootin seem to be doing something that work somewhat better than a simple syslinux /dev/sde1 (probably affecting the partition layout, since a format doesn't seem to undo it))