|Memtest will make sure that you do not have a memory problem that is causing major problems that appear to be hard drive or system problems.|
You can download the hard drive utility from the manufacturer of your hard drive (Seagate, Western Digital, etc.) that can test/evaluate the hard drive and there should also be one to partition/format the drive. You may have to open the case to see what brand of hard drive you have. I know that Western Digital offers a free version of Acronis that will only work if you have at least one Western Digital drive installed, but it can handle just about any partitioning and formatting issues you may have. Seagate and others should have something else for you available.
If you are seeing C drive in the Windows installer DVD then you probably passed the point where you can perform this operation. You need to go to Custom and then Partition/Format. THEN you need to delete ALL partitions and you will be able to create a new partition. THEN you will be able to format it. Remember that this operation will wipe the entire drive and you will lose anything that was on the drive that was not backed up somewhere else. If you are not getting the Partition option then you may not have an install DVD, but a Recovery DVD which may not have this option.
You have to be a little bit crazy to keep you from going insane.