Your right, Windows 98 will only format up to 127gb, and the format utility will only format up to 32gb.
A utility like Partition Magic would easily perform this task, but there are free alternatives.
I have not tried this utility myself, but have a look at this site:
Ridgecrop Consultants Ltd
Usage:
- Extract the utility to c:\
- Go to
Start, Run and type in
cmd
- In the command window type c:\fat32format
[drive:]