Was curious so I loaded some mp3s onto a USB drive and tried it out.
Short answer: DNX8120 cannot fast forward/rewind within a track but can easily skip between tracks.
But let me also add that the USB implementation was good. The mp3 files showed up, album artwork was visible and they sounded good as well. The menu buttons allowed easy selection from folders, albums, etc and was a lot like the iPod interface. For music, I rarely if ever FF or REW, I usually just select another track from the menu. (or skip to the next one)
Of course, for long files from audio books or lectures one's needs could be different.
The DNX8120 really is a great unit and I am extremely happy with mine (though I use an iPod for music instead of USB).
Edit: One more thing - I also had a DNX7100 and the 8120 is much better. I returned the 7100 due to iPod and bluetooth issues and the 8120 solved those issues completely. The menus are also much better thought out. Finally, it is a really easy swap out since the cage and GPS antenna are the same.