Still wrong:
The builtin Windows XP format tool won't format a drive of greater than a certain size, but ANY third party tool will and any other Windows version's tool will.
The restriction was just with one specific release of XP and even then I think service packs fixed it. I could look it up, but anyone using the Windows built in disk tools to handle (other than report) disk management should switch immediately to one of the many free tools that are far better and more reliable.
Microsoft's understanding of disk management has ALWAYS been more than a little suspect, and I used to work with MS.
I use EASEUS tools on my machines.

So... Still no ideas on how to fix it? Or some ideas on potentially relevant tests or information I could give you?

(On a related note)
Would you advise that I have multiple or a smaller fat32 partition then (with the whole slack thing)?
I have already backed up that partition, and reformatted several times, but no luck.

In post #7, you have posted a link to an image of your drive/partition using some windows third party tool which shows the ext4 (Linux) partition with a drive letter assigned (G) while the windows vfat partition has no drive letter. Backwards from what is expected, why is that? I don't know, maybe a windows system only allows one drive letter per flash drive??

In post #12, the link to the Disk Management output shows the vfat (first) partition with the drive letter G, the Linux partition none. This image also shows the vfat partition as RAW. Generally, the more common reasons for windows to show a partition filesystem as RAW are an unrecognized filesystem (not the case here as it is vfat) or a corrupted filesystem.

I'm not sure how you are creating these partitions/filesystems but you referenced GParted earlier. I would suggest you first backup any data you have on the Sandisk (if any), then use either windows Disk Management or a windows third party tool to create a partition with a vfat filesystem at the beginning of the drive. This should assign a drive letter available in windows. After that, reboot and change the boot priority in the BIOS to boot your Feren installation DVD/flash drive to begin the install, creating a partition for Feren and leaving space for swap if you want. Make sure you install the Grub boot code to the MBR of that drive.

Once that is completed, reboot to the installed Feren OS to see if the vfat partition is available. Do the same in windows.

Windows treats USB drives differently depending on whether how it presents itself.
If the drive contains a partition table or pretends to be a USB Hard drive it allows partitioning.
If it presents itself as a superfloppy it won't like partitioning it and will likely ignore any attempt to do so.

Both will only be bootable if the boot flag is set AND the drive supports booting.