"NO DOS disk" means that the drive isn't formatted yet. How are you trying to format in Shell? Format DH0: won't do it.
Try to just click the "NDOS disk" once, hold down right mousebutton and pick Initialize from one of the menus if you are using Workbench1.3.3. If you are using Workbench2.0 you should be able to select Format disk or something.
