After many hours I found the hidden solution: • Insert Bootable USB Flash Drive• Turn on Dell PowerEdge T110 II• At Dell splash screen press F11 to select Boot Manager• This is the trick, in Boot Manager select Harddisk • The next screen will be the option of USB Flash Drive or Harddisk. Select USB Flash Drive.  This is so counterintuitive. Why would the USB Flash Drive option be hidden until  Harddisk  is selected? Why not just show both options in the first place? Is this documented anywhere?
New PowerEdge T110 II, can not install Windows 2012 r2 via bootable USB thumb drive. BIOS 2.8.0 does not recognize USB thumb drives, Tried in front ports, back ports and internal ports. Tried 3 different USB thumb drives. Don't see any BIOS option for USB boot. OS is from MS Volume Licensing Service.  SW_DVD9_Windows_Svr_Std_and_DataCtr_2012_R2_64Bit_English_-4_MLF_X19-82891.ISO is 5273550 KB and to large to burn on DVD. So useless hardware with no OS.
No USB boot option on PE T110 II