Also in the root of the USB. I followed instructions found in the comments here;
How to Make openSUSE 11.1 LiveUSB | Spirit of Change
Maybe you can piece something together if the file isn't there. If not, maybe give it a try with the standard 11.1 iso.
Installing via USB is definitely a frustrating experience - if it's any consolation, it seems that 11.2 is going to make it much easier.