Why does 'dd' not work for creating bootable USB?

You are writing the image to the partition 1 of /dev/sdb

Change this to the following command:

dd if=/mint/iso/image of=/dev/sdb oflag=direct

this information was acquired from here

You copied the image to the first partition. Try copying to /dev/sdb rather than /dev/sdb1.

The actual mechanism varies a bit depending on the type of image you're using, but for simple DOS/MBR images you need to get a correct partition table (with the bootable partition marked as being bootable, and the MBR - the part of the initial 512 bytes that isn't the partition table - containing initial boot code.

From my experience with another Linux distro, all you should have to do is change the syslinux boot loader file and modify it to boot the USB. There's more detailed information about this at the syslinux wiki.

See also this Google search.