Are you running the application as Administrator? Vista is a pretty buggy OS, but I'm not going to jump to blaming it.
The way XTAF v44 displays the contents of your USB device puts you in partition3. Like so:

Both the "Cache Partition" and "Data Partition" are in partition3. So you're basically viewing the contents of partition3.
Within the "Cache Partition" folder, there should be another folder called "Cache". This is where the TU's go. Mine doesn't list any because I don't have any TU's on the drive at the moment. Verify that this is what your setup looks like. Care to post a screen shot of what XTAF displays?
(Also, disregard "Cache2". It's left over from a TitleManagement app for my JTAG. It does nothing.)
FTP'ing to your JTAG is extremely easy, and is extremely versatile.
1) I would recommend to disable Live access in the Family Settings pane. Both Live access and the creation of Live accounts. This will prevent any communication with Live servers which could potentially become problematic.
2) Connect your Xbox to your network. (If you want to go straight from computer to Xbox, its a slightly different setup. Just say so, and I can spell out how to do this.)
3) On FreeStyleDash, there is an option to enable showing of the Xbox's IP on the dashboard. Do so, and take note what it is.
4) On your computer, use an FTP client such as
CuteFTP or
FlashFXP to open up a connection to the IP address of your Xbox. The username and password are both "xbox" (without the quotes) by default.
5) You should then be able to browse disks mounted to the system. Meaning, if the external is plugged into the system, you can browse its contents, and drag and drop items into place.
6) Determine which listing represents your external HDD and open it in your FTP client, then browse to the "Cache" folder on the external.
7) Dump TU's to this directory.

Reboot the system, and try loading a title. See if the update was grabbed.
What game/method are you using to verify that the title updates are
not taking affect right now?