I had a similar problem trying to format a NTFS hard drive. I solved it by using a Win 98 boot up floppy. I was then able to FDISK the drive and then reformat it in FAT32 (I was doing a Win ME set up on a relatives PC). From what I understand XP sorts all the FDISK and Format out for you. So once you have done the business, set the BIOS to read the CD rom 1st and then boot up with the CD in the drive. You can download Win ME boot disks off the net
http://www.bootdisk.com/bootdisk.htm or I can post one to you.