1) tried to upload manually thru ftp but failed due to certain write permission error (?)
Is this releated to your attempts to create an FFP stick?
2) Whenever i plug my USB stick at the back port, NSA221 will automatically makes a copy of the contents
Have a look in the administration pages, at the USB copy function. Maybe you can switch this off. Doesn't the 221 has a copy button?
and after a restart, it remains same
Does the stick meet all requirements? Only one partition, FAT Formatted? Is an ffpboot.log made?
3) tried the telnet backdoor and it opens a blank page.
'it' is your browser, I suppose. That is normal behavior. After that you should be able to login over telnet.