Use BootIt - Lexar USB Flip the Removable Media Bit Tool
http://www.pendriveapps.com/2008/05/01/bootit-lexar-usb-flip-the-removable-media-bit-tool/
http://files.filefront.com/lexar+usb+formatzip/;10112841;/fileinfo.html
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<Flip Removable Bit> button is on its own, it's not related to other setting in window.
It changes the "removable bit" in the UFD's firmware to the opposite value, so it can set the device non-removable or reset it back.
>>>The issue with partitioning is most UFD's are marked with a "removable bit". This tells the system to treat the device as a removable or fixed disk. Windows XP does not recognize removable disk with multiple partitions nor lets your partition them. I found that the Lexar utility named "Bootit" is able to change this bit on the 16 gig flash Voyager and hence allows you to partition the drive in XP.<<<
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Compatible UFD's:
-16 gig flash Voyager
-Lexar of course
-16 gig OCZ Rally 2