Yesterday I ran into this problem… My pendrive stayed in a “dumb” state and when I plug it into the PC USB told me “The disk is not formatted. Format now?”
The problem came when the formatting disk dialogue, “capacity” said “unknown capacity“. And we I tried to format, gave an error.
The issue is that the usb stick had not a created partition. The solution of the problem is to create a partition.
For this we have several options, one of them would be the “Partition Magic” software.
In Windows XP/Vista/7/8 we have the “Disk Management” software, a software that comes with the operating system to perform the operation you want.
Hit “Start” menu and “Run” command. Write “diskmgmt.msc” and launch. The program seek our unit for its size and letter. You can create a partition and format it.