External Hard Drive Format Problem

Hi

I have attached a 120 Gig Seagate Hard drive to my new Vista Home Premium
laptop using an IDE to USB lead which I have bought. It is in a removable
bay enclosure. The hard drive had been used in my old desktop as an
additional internal storage drive. It had been formatted using Seagate's
Software because my BIOS would not detect its full size without additional
software. This worked very well and I was using Windows ME.

Now it is attached to my Acer laptop I cannot get Vista to see its correct
size. It is telling me that it is only 32 Gig. It shows up in DM fine and I
have followed advice posted previously here and used Vista's Disk
Management. It appears to me that Vista can't actually partition and then
format above the 32 Gig limit. It that correct?

I believe I may be able to go into Command Prompt and partition and then
format my drive fully. Can anyone help me with the commands please. From
what I understand, Vista will then be able to see the drive but just cant
format it for me in the first place.

Would I be better using FAT32 or NTFS file systems?

Thanks

Nigel