Well just having a virus stored on it isn't going to give you any problems. You must have ran it, and its probably loading off the drive and preventing you from doing anything with it. Have you tried formatting it in another computer? You probably want to make sure it doesn't have any autoplay content as well. You could try the ultimate boot CD, Linux Live CD, etc. to work with it as well; that might be a little safer.
Try using a utility that is specifically used for formatting USB thumb drives like the HP utility. Some USB thumb drives such as the Sandisk U3 models are difficult to format because they create multiple mounted drives on a Windows system.
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