You can format all but your system drive from within Disk Manager.
Under no circumstances will a running W2k allow you to format the
partition containing itself. You must do this from some other booted
system on the machine, typically a DOS-based boot from a diskette or a
bootable OS install CD. (You can use the W2k CD for this; after the W2k
install process begins, it offers you the opportunity to format any
partition, as a prelude to installing to that partition.)