What tool did you use to put DOS onto the USB stick? Are you telling the machine to boot specifically off the USB -- usually via the F11/F12 boot-up menu?

And that requires direct access to hardware, so it won't run in DOSBOX or a Virtual Machine?

The good tools for that are all free, and Linux-based these days; having a small Linux partition is the best way to go there.

Well, with just XP and 7, it should work.

Adding DOS, if you absolutely had to, would need to be done later... and is probably best done by using a DOS disk image on the small Linux partition, and using GRUB to load that, rather than installing it to a separate partition (you wouldn't have enough unless FreeDOS can boot from an extended partition.)

I haven't heard of/thought about SystemCommander in around a decade.

Then again, I haven't used FAT on anything except removable media in nearly that long, since decent NTFS drivers became available for Linux. Modern journaling file systems are significantly better.

Commercial 3rd party utilities are so 1990s. Learn GRUB (I recommend GRUB 1.x, which is a lot easier, as long as you don't need UEFI support; GRUB 2 is even more powerful, but GRUB is already essentially a very light operating system, and with GRUB2 you trade a lot of unfriendliness for features you don't need.)

UEFI, "Unified Extensible Firmware Interface" is a new standard that replaces the old interrupt-based BIOS. The main practical benefit is knows how to boot from GPT-partitioned disks, which for the scenarios you are talking about gets rid of two annoying DOS-era limitations: no booting from disks larger than 2TB, and no more than 4 bootable partitions (3 if you have an extended partition.)

It has some other benefits (like not needing a bootloader at all to do multiboot, faster system initialization, secure boot for those using it) Unfortunately, it's only supported with Windows 7 and later, and on comparably recent versions of other operating systems (e.g. for Linux or *BSD, versions since 2009 or 2010 on most distributions.)

It's also a bit harder to figure out when you start digging into custom installs of more than one OS, although it's really powerful once you learn it.

I can't see why someone would WANT to multiboot, but not WANT to take the time to learn about virtualization.

With modern software -- most of which is free, BTW -- you can very easily run multiple OSes at the same time, rather than having to multiboot, and for old DOS stuff, it adds the benefit that it reliable runs old pretty much ALL old DOS stuff that doesn't require dedicated hardware in a Window vs. Windows' DOS console (gone in newer 64-bit versions, anyway) which failed with a lot of software (the now-unsupported open source NTVDM package helped with a lot of things, but not everything.)

I have a few old games that run well on XP but not which have problems on 7 or later. 7 (well, 7 Pro or better) came with a free virtualization solution "XP Mode" which at the cost of a moderate size download runs about 95% of the software I've seen that has problems on newer versions. The remaining 5% are all games that require a stronger graphics card than it's possible to emulate, or require direct access to a piece of non-USB hardware. It has no trouble with USB-based hardware; my old scanner, which is not supported under Vista or 7, ran great on XP mode, and connecting USB hardware through to the VM is dead easy. (It's based on Microsoft Virtual PC which used to be a separately sold commercial product, and the copy that XP Mode installs can technically be used for other OSes, but it's very NON-easy for any use case other than XP Mode.)

VirtualBox isn't quite as easy, but can run pretty much any OS out there (including the ones you've talked about plus even older versions of Windows, the Mac OS, Android, Solaris x86.) It's still pretty easy, and it's free/open source for most of its features; emulating higher-speed USB 2.0 requires a free-for-non-commercial-use but closed source extension pack downloadable from Oracle, and USB passthrough is trickier to do than on XP Mode. It's a much smaller download, too (although to run XP on it you need a license or to look up instructions on how to use the VM image from the XP mode download.)

DOS is even easier, since it's sufficiently old and basic you can emulate it outright rather than using virtualization. If you don't need physical hardware access, DosBox just runs and is a superlative program as long as you don't need any hardware access -- your files live in a regular subdirectory under Windows or Linux (can map as many subdirectories to different drive letters as you like) -- and can run pretty much every piece of DOS software I've ever seen that doesn't need raw access to disk drive blocks. (Free, and open source.) The biggest problem it's got is no printer-port emulation support, so if your software doesn't support COM port printers it is not possible to print (and if it does, it's not much better, although it IS possible.)

(I'm pretty sure you've said you don't game, but for old DOS games it has the added benefit of doing speed throttling way more effectively than any other option I've ever seen -- you can smoothly scale the speed to it your liking, plus for loading screens and stuff you can hit Alt-F12 for "run as fast as the hardware is capable of")

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Your call on what to spend your time on, but I would expect that the couple hours it would take to explorer VirtualBox fairly thoroughly would prove fruitful as a matter of general knowledge even if you decided it was not appropriate for your use cases.