http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do is where you can check if you weren't already aware.
You can purchase a bank owned/foreclosed home with USDA financing, but keep in mind the home needs to pass the same requirements than an FHA appraisal would impose, so if the home says it's not eligible for FHA or VA financing then that would normally apply to USDA financing as well. Also, if you are going through a lender (rather than directly with USDA) then USDA takes a little bit extra time due to the loan having to be sent to the USDA field office for the Conditional Commitment - so if you are making an offer on a bank owned home you may want to ask for an extra week or two longer than if you were going to utilize FHA financing (or other types).
As far as using the USDA to purchase a foreclosed property it would depend on the terms and conditions of the particular program, and the subject property would probably need to pass an inspection by the USDA for habitability and other criteria. This question would be better addressed by the mortgage person or your Realtor, both of whom would be more familiar with your particular situation.
Feel free to call me if you do not yet have a Realtor on your team and I will gladly help you.