I need detailed instructions on how to first format my 256MB USB pen drive in linux then write a linux image to it using 'dd' (I'm open to all alternatives). I have a very limited understanding of mount points so I'll also need some help with that. The image I need to write is bootable so the partition needs to be too. I'm using Fedora Core 3.

There are several ways to do this. One way is to add the following line to your fstab file.

/dev/sda1 /mountDirectory vfat noauto,user,rw 0 0

If you do not know where this file is located, it is in the /etc directory. There are many parametes that you can change, this is just an example. This is also assuming that you usb drive has a fat32 partition type. Most of them do. You will not have to "format" it for linux if you have fat32 support in your kernel. After adding that line, you need to create the mount directory. You also need to make that directory readable and writable.
To mount the drive you then just type in a terminal
mount /dev/sda1
And to unmount
umount /dev/sda1

The drive will then be mounted in the mountDirectory you created.
As far as copying the linux partition with dd, I don't know exactly what you are trying to copy. Are you trying to copy the boot partition for dual booting with windows or something? You might try

dd if=/dev/hda1 of=/mountDirectory/linux.bin bs=512 count=1

I hope this helps.

I'm trying to write an image on the first of the FC4 install disks to my USB drive. The disks wont boot on their own so I want to use a tool Fedora gives me to boot to the USB first and then on to the disks. Trust me this all works out. I just need to get the image "diskboot.img" onto my pen drive.

I understand the basic directional commands of dd but the stuff you have to add to the end confuses me