I found the solution!!
If your USB has no files on it, the USB drive DOES NOT show up as a drive to move pictures too! I placed a jpg file on the USB drive, stuck the 8 GB exFAT drive back in - BINGO - the USB drive now shows up as a location in Gallery that I can move my photos too.
NOTE - this was all to support the latest software upgrade from 3.0 to 4.0 - where it told me I didn't have enough space.
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