BIG THANK YOU to Skateman as he took the time to work with me and provided some command line items that fixed my issue completely.

Step 1: Use for example Balena etcher so burn the IMG file to a USB drive.
Step 2: Stick the USB drive in a USB port of the X5000
Step 3: Turn on the X5000 and press ESC when the boingball starts spinning
Step 4: Go to Command line
Step 5: Type USB RESET and press enter. (the X5000 will scan all the usb ports again)
Step 6: Type AMI and press enter (you will be back in the menu)
Step 7: Choose MorphOS and see if the system boots from USB

Steps 4, 5 and 6 were the missing pieces that solved it all.