Try Assign SYS: RAM: add
before format command.
Won't work, because ASSIGN doesn't set the required paths. Copying FORMAT to RAM: and executing it from there will work. Just use 'CD RAM:' after copying. The system will look in the current directory first, and since this is now RAM:, it will find FORMAT there.
The only thing that will prevent this from working is if FORMAT needs some other files from the Workbench disk, and that I don't remember, although I find it highly unlikely that it does.