Ok, after much experimenting with like 9 different flash USB drives, it seems this stereo has a problem with USB flash drives that don't load "fast enough".
These are the drives I've tested all USB 2.0 FAT32 format @ 8,:
1. 16GB Sandisk Cruzer glide (works)
2. 16GB Sandisk Cruzer blade (works)
3. 16GB HP mini drive (doesn't work)
4. 8GB HP mini drive (works)
5. 32GB PNY drive (doesn't work)
6. 4GB "Mimibot" novelty drive (doesn't work)
7. 4GB unbranded novelty drive (works)
8. 1GB kingston drive (works)
9. 512MB unbranded novelty drive (works)
So, 6 out of 9 drives worked, and the reason I say the "non-working" drives don't load fast enough, is this: I searched the web for any differences between Sandisk and PNY USB drives, and the main difference I see people talking about is that Sandisk is a much "faster" drive than PNY. This may be the key to working in the 2013 Altima.
I haven't tried any USB 3.0 drives. Maybe they will work better. But for now, Sandisk seems to be the magic brand that it likes, even with the larger 16GB drives.
I'm still going to the dealer. If they can't get the factory stereo to work at least as well as my old pioneer in my Civic, hopefully at least they can replace it with a nav unit.
If anyone else has any other info, please share!