Actually this toy was for qvc and people watching qvc are not really into emulation you see, more like "Monster Exerciser Golden Muscle Turbo 2005", "Ninja Hyper-real Mega Blade 2004", "Lie in Your Deathbed while Losing Weight 2006" and other similar goodies - so this is pretty high quality stuff by their standards.
Basically it is C64 hw emulator probably very similar to C1, since it is designed by the same girl.
The games are cracks from tapes according to some posts.
So the drive prompt seems to be a fake, or used to boot some memory mapper short program thingie like NES mappers.
I don't know about the real compatibility of the device, anyone tried say Mayhem in Monsterland or anything that requires cycle-exact emulation...?