There's infinity between should and does sometimes.
So it was already ext4.
I ended up manually running the steam console as described here. Still wasn't able to use the gui to add a drive but I was able to use the console command to do it manually. Then I restarted to make sure everything was working. On starting steam again it was gone! So I full exited steam and opened console again, and somehow it was there! So I set the option under settings to start on boot thinking that it'd run the console edition again on boot and I could live with that.
Well it turns out somehow there are now 2 steam installs on my computer. I'm not gonna touch it since it's working, but my working theory is somehow running the console created a second steam on my pc. It did act like it was doing a full install the first time I booted on command line. Weird. But like I said it's working now. I may poke at it later and see if I can uninstall the redundant one, but I kinda don't wanna poke it.
The USB drive was formatted as ext4. It was my steam library on windows, I figured having the native file system for a drive that's exclusively going to be used to run linux games was a good idea.