This is just a hard drive in a case, you should not have any issues using the disk erase option from Mac's OS.
Do you have another Mac you can try?
Also you may want to try to zap the PRAM on your Mac
you can do this by turning off the Mac, then holding down (apple, option, P, R) at the same time as powering up the unit. Keep holding the (apple, option, P, R) keys until the Mac chimes 3 times. This will force the Mac to rediscover the attached drives.
Formatting the drive with a Mac format will prevent you from using it with a Windows machine.
The trouble you're having with formatting the drive is common with large size drives. Our drives have their partitioncreated using MBR (Master Boot Record) but most MACS have a limitiationin the size of a MBR partition they can modify. To fix this go intodisk utility and do the following:
Leopard's Disk Utility offers three types of Partition MapSchemes: APM (Apple Partition Map- bootable on PPC Macs), GUIDPartition Table (bootable on Intel Macs) and MBR (Master Boot Record(as it would be formatted from a Windows machine, and often thepartition map that comes on new drives).
You can see what your drive is currently by selecting the drivein the left column of Disk Utility and looking at the info at thebottom of the page. Look at the "Partition Map Scheme:" entry for theanswer.
If that is the case go create a new partition scheme creatingone large partition, and then you should see "Options" which will allowyou to change it from MBR to GUID(most likely) or to APM(less likely). You will want to use GUID. From here proceed normally to format the drive.
I just clicked "Software Update" and found Version 1.3 of the Macbook EFI firmware update. It claim the USB kind sleep problem is fixed. After upgraded my Macbook (running MacOS 10.5.5) to this new firmware. I can successfully re-partition to GUID as Mac Extended Journey volume and use Time Machine to do back up.
So, anyone using the new Macbook (2.4G version) running MacOS 10.5.5 should upgrade this new firmware.