BitLocker non-TPM: USB key not detected

I have enabled bitlocker encryption on my T42 whithout TPM support. I have
put the encryption key on a USB key when I enabled BitLocker as instructed.
The drive is fuly encrpyted now, but when I restart the machine it can not
detect the USB containing the key even though I have it plugged in and the
BIOS can even see it. The exception is that when I use a bootable CD which
allows me to select "Boot form C:\" it does recognize that the USB key is
there and boots up fine. Without the bootable CD I have to type in the
recovery password to boot up.

Any insight on this problem? Thank you.