Sorry to hear you are having such trouble.
Can I confirm your using a PI B+, and not a PI 2.
During the boot process did you see any error messages ?
Possibly when starting hostapd ?
At the end of the boot process the usb devices are listed, what is reported for the wifi dongle ?
Can you tell me where you sourced the wifi dongle from, and if possible a link to the device.
If no wifi hotspot is showing this would point to an issue with the dongle, possibly not an rt5370 ?
I asked before, but you did not reply, can you confirm you had no rj45 connected during the boot process ?
Finally you cannot login to the OS, logins are disabled in PilotAware
Thx
Lee