I think it is the Cisco way to make you pay for the "free WLC" since the VM essentially replaces a hardware controller with embedded licenses.  I'm still rocking a 3802 with ME and 3702 subordinates....because it just works.

ME runs the controller on 2800/3800 the 2700 are subordinate APs I think ME is still relevant.

Anyone stumbling over this i the future - the idiot proof method of getting USB formatted is get a 1 or 2GB cheap USB, put in it a switch with a functional USB port and format usbflash0: or usbflash1: 

I realize this is an ancient thread.   The original post was for a 2960.  This solution is for a 2960X.   The 2960X (and the 2960-S)supports TFTP in ROMMON.  The 2960- 2960+ and 2960G do not.

Cisco won’t release / bless it but you can dl it from LSI and install it yourself