Hmmm.  Just a thought, but are you running on USB 2 or 3?  If 3, try 2.  I've had some issues with USB 3 on my XPS 8910.
I have an XPS 8700 running Win 7 Pro & am unable to create a factory recovery media on a USB external drive.  It is difficult to get Dell Backup & Recovery to recognize the drive.  But, even when it does recognize the drive, it starts running initialize & then gives the error that a different media must be used.  The drive in question is a 2TB Western Digital My Passport.  I have read several threads with the same sort of issue but have not found a resolution. I am running the latest version of Backup & Recovery. 
Cannot Create Factory Recovery Media