Fix for when FAT-formatted devices from OS X Disk Utility do not not work on PCs.
Recently I’ve been having the issue where my PC says “You need to format this drive before you can use it” whenever I plugged in my USB stick.
And when I did click “Format Disk”, it would show up as a 200MB capacity disk! My USB stick is 16GB, so that is definitely not good enough.
The thing that confused me was that I was formatting this USB device as FAT using the Mac OS X Disk Utility, so it should have worked right?… well it turns out there are a few more steps.
Step 1: Open Disk Utility, and select your device on the left hand panel (of course).
Step 2: Under disk utility, you actually have to click the “Partition” section, and then select “1 partition” from the Volume Scheme drop down menu
Step 3: After that, click “Options” and select “Master Boot Record.” Otherwise OS X might use GUID which Windows doesn’t like.
Then you just hit apply, and you’re done with that business. That’s what got my 16GB USB stick to actually show up as a 16GB device under windows.
Note: this guide is for Disk Utility in OS X 10.5 and 10.6. If you’re running 10.4 or earlier you might have to do some exploring on your own 
Thanks for this article. I can see it solving problems for thumb-drive owners everywhere ;D
thanks! this is very useful!!