I haven't used it yet either for Windows 8. But you don't need to format the flash drive, the utility does that and will overwrite whatever is on the drive.
The message says it is unable to copy some of your files, but isn't specific about whether it is having trouble with the .iso or putting them on the flash drive. I will try it in a couple of hours to see if I can get it to work, but it looks like TerryE got it to work.
It should be noted, if you want to use the flash drive with a UEFI system, that tool will format it in NTFS, which will not work with UEFI.
Edit: Just a question, since I cannot tell. Are you running the tool from Windows 7 or Windows 8?