Just picked up a 128 GB SanDisk Ultra Fit and it works great. Didn't have to format it. Just loaded MP3s on it and it was up and run. It's really small too which keeps it from getting in the way.
Did the drive come with software and folders already installed on it as Jim noted above? Also, have you tried the sandisk again to confirm that it's still working to rule out the possibility that something downstream of the drive isn't working correctly?I googled how to format the drive and it does say it is FAT32...