I finally managed to format my 4GB sandisk memory as FAT16. Tried it with CHDK and all is working

[Windows]
- Make sure your memory is currently formatted as 4GB. If your card is partitioned, then get all partitions into one (max 4GB).
- Open the command prompt.
- type:
Format X: /FS:FAT where
X: is your card letter.
- You will get a compatibility warning of using FAT with size > 2GB. Ignore and continue.
- Test your card now. Make sure to make it bootable + load CHDK..
It worked for me! Hope this helps anyone..
Backup all your data on the card before attempting this!!