XC Tracer with USB_MSD support behaves as follows: 

When the USB cable is connected with XC Tracer and the computer when you switch XC Tracer on, then XC Tracer runs in USB_MSD mode. In this case you have to press the red button for roughly 1 second to turn on or off XC Tracer. In this operation mode you will have access to the SD card, you can copy files from and to XC Tracer, download logs, change the config fiels etc. Firmware updates are now very easy, just drag and drop the new firmware (*.bin file for XC Tracer / XC Tracer Mini, *.iap for XC Tracer II) to the SD card of XC Tracer, and then press the button for roughly a second. XC Tracer will then update the firmware, make a few beeps and shut down. The new firmware is now installed.

When the USB cable is not connected with XC Tracer when you switch on XC Tracer, then XC Tracer works in flight mode. In this case you have to press the red button for roughly 3 seconds to turn on and off XC Tracer.