You are lucky it didn't work, you almost formatted you Workbench disk!
1- Put the PC0 icon back in Storage/Dosdrivers.
2- Boot with WB disk.
3- Go into Storage/Dosdrivers and double-click the PC0 icon.
4- If things are working correctly, all disks from now on will have 2 icons, one for Amiga filesystem and one for PC filesystem (named

?? or NonDos or something weird-looking, it should also have the Cross-Doss icon)
5- REMOVE YOUR WB DISK NOW (AND WRITE-PROTECT IT)
6- Put your blank floppy in, wait for both icons to appear, single click the weird looking one and choose Format Disk in the right button top menu.
7- You might be asked to replace WB temporarily for it to load the Format command, then it should ask for the blank disk and formatting will begin.
EDIT- 8- To read PC disk after a reboot, you will need to double click the Storage/Dosdrivers/PC0 icon again. (It's normally better to keep it in Storage than have it loading up every time you switch on)
EDIT - Just remembered, some Amigas need the High Density hole of a disk cellotaping up before they work correctly