I remember I had this problem once with a 2 GB harddisk.
Formatting would stop at a certain point.
I seem to recall I had the wrong maxtransfer setting.
You can find the right setting at
http://www.gregdonner.org/os39faq/diskfileoperation.html------------------------EDIT---------------------------
I just checked the drive. I used maxtransfer 0x0001fe00
and had no problems ever since formatting the drive.
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Good luck,
Lloyd