V3 user here!
Not entirely sure what could be causing that USB timeout error to show up (though I would be irked too if that were happening to me)... but I do know about the SRAM file format alteration.
Older ED64 firmware OS (Pre-X7) reads .sra files, but the X7 firmware OS reads .srm files for SRAM instead.
What I did was rename all my .sra files to .srm so that they could be recognized by the X7 firmware, and that ended up working pretty well for me at the time.
Although, I personally chose to migrate back to an older OS (JonesAlmighty's Unofficial-Official ED64 OS v2.12.8 ) for my V3 because I was coming across some strange problems with the v3.05 X7 firmware the more I've used it. Examples being 64DD cartridge ports not saving correctly, EEPROM saves sometimes being randomly wiped clean for no reason, along with Neon64 NES emulator not creating savefiles when booting up an NES game, even when forcing the save method via save_db.txt which I can only assume is a firmware bug. This was never the case on the older OS'.