I wrote a guide on this but it has yet to be approved. :-(
the reason it is not working is because it is a GUID partition. Open up DIsk utility again. go to partition again but this time click options and check master boot record instead of GUID. select fat and click apply. when it is done select 1 partition again check Master boot record again but this time select empty space instead of fat. click apply. remove the drive pop it in your wii and this time it should format no problem.