You first have to create that file on the USB stick, called "/boot/key.luks" and
add it to your computer's LUKS key store. The initrd command will not do either of these steps. All it does is cause Slackware to check if there is a USB stick with the configured FAT label, and then locate that file you mentioned on the mkinitrd commandline, and present that file to cryptsetup for unlocking the encrypted volume. But if you did not first add the contents of that file into a LUKS key slot, then cryptsetup will not accept that file as a valid key.
For example, create a file with random content (512 characters), then add the file to the LUKS volume on partition /dev/sdX1 as a new unlock key. The new key will be accepted after you type a valid LUKS unlock passphrase:
# dd if=/dev/urandom of=/media/NASKEY/boot/key.luks bs=512 count=1
# cryptsetup --key-file /media/NASKEY/boot/key.luks luksAddKey /dev/sdX1
# umount /media/NASKEY
Those commands implied that you inserted that boot stick in the computer and Slackware mounted it automatically at /media/NASKEY .
When you do this, your LUKS volume will have two
unlock keys: the original passphrase, and the new key-file. It will not matter which one you use.