It's not a full TEST unit, since it doesn't contain the DSP that allows you to decrypt the PS2 logo on a master disc. But it does most of the things a DTL-H console would.
You don't need psxlauncher any more. Switch your console to DTL-H77001 because that setting is region free - your NTSC copy of Final Fantasy 9 should boot up in the correct video mode automatically. If you want to play a PAL game again, use PS1VModeNeg.
In my experience, cIOS-using homebrews will simply fail to detect some flash drives outright. Interestingly, newer (USB 3.0) are less likely to be detected than older ones. I have tried at least a dozen different flash drives so it seems to be a trend. Hard drives have always worked, however...