Glad someone asked this question.
My friend bought a 1GB Sandisk flashdrive. Unknowest to him, it came with it's own built in software and he lives in another state than I do and I'm here on the phone trying to tell him the exact same thing you guys just said above. We could never get the **** thing to format.
Well, finally I said it's time for google. Sure enough....the stupid thing had a built in software program to supposedly make it work easier/better.
Well, the program was called U3 Launchpad and the only way you could get rid of it was by uninstalling it with another program you had to get off the net.
Should anyone else encounter this problem, here is the answer to your prayers:
http://www.u3.com/uninstall/
The removal link is at the very bottom of the page.
I hope this helps people out in the future...I wasted an hour plus of my life trying to figure this thing out. Maybe if someone let's me know in the future that this link helped them...I won't feel as bad about that lost hour. LOL!
Oh yeah....make sure the thing is plugged in to your PC when using the uninstall program provided in the link. It was quick and easy. After that, you can format your flashdrive to FAT32.