It should boot from it, I think it uses a single partition and it becomes hidden, that's why you can't use it, not entirely sure if that's it though, this method is ok when using a around 4GB pen drive, but yeah, losing all of the 265GB is a pain.

Here's a much better solution for you https://www.ventoy.net/en/index.html

It's a different approach, and a much better one actually, it makes so you can boot ISO images without even having to burn them, you just install ventoy to your 256GB flash drive, then drop the linux images in the ISOS folder (that it will create)

Then you boot from the drive and you'll see a list of all the images you have there

You can also use the rest of the flash drive normally, it uses just a small portion of it for the bootable part

I'll explain how to use it step by step if you need it