You have a basic problem, the USB drive needs to be formatted with GUID and setup with a journaled file system. Then the OS Installer file which you’ve copied over needs to be converted to a bootable version.
Sadly, this needs to be done from another Mac system and as you have an older system the Mac you use to setup the bootable installer needs to be running Sierra or older macOS.
Your other option is to leverage Target Disk Mode connecting from the second Mac via FireWire cable, just accessing the second system but it needs to be running Sierra or older.
You also appear to be trying to use a newer OS than what this system was designed to support. Once you get to Sierra you can look at running a newer unsupported OS if you dare! I’ll warn you the systems performance will be seriously effected as your system CPU and RAM will hold you back.
Think it this way… You have an old 1960 VW Bug, so you put in an electric drive and battery system from a Tesla. Do you think that will work? The Bug can’t support the weight or space to hold the batter unit.
Sometimes there are physical limits which is the case here! Enjoy your system with macOS Sierra, don’t press your luck.