Maybe your usb drive isn't being recognized
My mkinitrd is
Code:
mkinitrd -c -k 3.13.2 -f ext4 -r /dev/cryptvg/root -m usb-storage:xhci-hcd:usbhid:hid_generic:mbcache:jbd2:ext4:ext2:vfat:hid:usbhid -C /dev/sda3 -L -u -o /boot/initrd-3.13.2.gz -K UUID=XXXX-XXXX:/keyfile
Note that I use the UUID rather than LABEL to avoid different mount points, either should work. The keyfile is in the root of the USB stick.
For you that'd be
Code:
mkinitrd -c -k 3.2.29-smp -f ext3 -r /dev/cryptvg/root -m usb-storage:xhci:hcd:usbhid:hid_generic:mbcache:ext3:vfat:hid:usbhid -C /dev/sda2 -L -u LABEL=USBKEY:/keys/key.luks
Note the modules included in the initrd for usb, usbstorage and vfat. You might not need all of those other modules.
Also, I'm not sure your path to the keyfile is correct. Had you mounted your stick into /mny? If your stick is in at boot time, I expect /keys to be in the root of the USB drive.