Hi, sorry I haven't been paying attention to these forums for the past several months. Since your Blu-ray player accepts so many different video formats, just burn the source video using the DVD-Rom (UDF) setting in the Toast Data window. That should turn out the same as if you played the video from the USB flash drive and save you lots of time as well.
I recall discussing the jerky video problem back when I was paying attention but don't remember exactly how I resolved it. It may have to do with the frame rate of the source videos is not 29.97 or 30 frames per second.