I've solved my FreeDOS problem for an USB stick. It's easy. We had discussions about that point here (http://www.masmforum.com/board/index.php?PHPSESSID=29f7c3886b8d4e1726bf58e4ad4c2638&topic=14762.msg120148#msg120148) and here (http://masm32.com/board/index.php?topic=3482.msg36650#msg36650).
Of course, the DriveKey utility by HP does the job for DOS 7, but not for FreeDOS. A better solution is the usage of the free tool RMPrepUSB, which can be downloaded from this site (http://www.rmprepusb.com/). It's menu-driven and easy to use. It formats your USB stick which you can use as floppy or as hard disk, it'll copy the needed system files onto the stick and installs GRUB4DOS. The only thing you have to do is to write the file MENU.LST for the boot manager. That's very easy. I would recommend that tool.
During my search I've found an online document by N.G.Hitrovo: First steps towards system programming under MS-DOS7. It has not much to do with real system programming (he makes a few attempts with DOS DEBUG), but it has a good overview about the available DOS drivers for different purposes. It's not bad as a refresher. It's available here (http://johnson.tmfc.net/dos/file/frststps.pdf).
Gunther