Please unplug the device. Get a temporary internet connection by ethernet, tethered or whatever means possible. Open a terminal and do:
sudo apt-get install git linux-headers-generic build-essential
git clone https://github.com/porjo/mt7601.git
cd mt7601/src
make
sudo make install
sudo mkdir -p /etc/Wireless/RT2870STA/
sudo cp RT2870STA.dat /etc/Wireless/RT2870STA/
sudo depmod -a
sudo modprobe mt7601Usta
Insert the device and it should be working. Let us know your success as we will have one additional step.
You have compiled the driver for your current running kernel only. When Update Manager installs a later kernel, known in Ubuntu as linux-image, after the required reboot, re-compile:
cd mt7601/src
make clean
make
sudo make install
sudo depmod -a
sudo modprobe mt7601Usta
Please retain the file and these instructions for that time.