Using another kernel than zImage, the zImage_2.6.32.54-openmode_l2fix solved USB problem even using backupmenu.

But then even if as user:
disclaimer-cal remove View-openmode
AND the --suppress-warranty-warnings
Every time reboot this irritating warning appears
and tried flash twice.

Does I really need to use old zImage.PR13 to get it to work or...?

C:\Programmer\nokia\Flasher>flasher.exe -a DFL61_HARMATTAN_40.2012.21-3.340.04.1
_PR_LEGACY_340_ARM_RM-696_PRD_signed.bin -k zImage_2.6.32.54-openmode_l2fix --fl
ash-only=kernel --suppress-warranty-warning -f -R
flasher 3.12.1 (Oct 6 2011) Harmattan

Picked ape-algo from a FIASCO file
Device is in Sync and connect mode, sending ADL reboot.
ERROR: ReadFile(65540) GetOverlappedResult() error 2 timeout 4975 ms
Unable to detect flashing interface: standing by for device reboot.
Suitable USB interface (bootloader) not found, waiting...
Found device RM-696, hardware revision 1603
NOLO version 2.3.6
Version of 'sw-release': DFL61_HARMATTAN_40.2012.21-3.340.04.1_PR_340
Sending ape-algo image (7103 kB)...
100% (7103 of 7103 kB, avg. 13427 kB/s)
Suitable USB interface (phonet) not found, waiting...
Ping attempt 1 (250 ms)
Server application: 1.7.2
Found product RM-696 rev. 1603
Server implements softupd protocol version 1.8
Image SW version <none>
Image cert-sw not present
Image cmt-2nd skipped
Image cmt-algo skipped
Image cmt-mcusw skipped
Image xloader skipped
Image secondary skipped
Image moslo skipped
Image rootfs skipped
Image mmc skipped
Image tar skipped
Image config skipped

Battery level 55 %, continuing.

image [state progress transfer flash speed]
---------------------------------------------------------------------
[x] kernel [finished 100 % 2712 / 2712 kB 2032 kB/s]
Updating SW release
Success

C:\Programmer\nokia\Flasher>