USB Format Problem

I went to ntfs.com and made every step to allow NTFS for my USB to be available as well (before that only FAT32). The problem of my USB is that you can see its capacity but in fact, after 600 MB if you have an avi, it is empty after the ~600th MB, if you copy any file after that it is blank with the same file size, so the USB ruins the files if they exceed even 400-500 MB. I taked to a guy from a Cyber cafe who knows pretty well that stuff, as he knows the hex codes, the partitions etc, and he told me my USB that was in FAT32 to be changed. And thx to him I also solved problems on my HDD with drives saving avi files to not more than 4GB (they were FAT32 but after formatting them to NTFS I coulds store as much as 25 GB file). But you see what I get with the USB when I try to format it... I tried it on a laptop that uses Win XP Media (smth like that was the name), while the PC with this screenshot is with Win XP Pro SP2.

http://img530.imageshack.us/img530/8779/usbformatproblemxv1.jpg