Hey d....
If you got a driver CD with the pen drive, browse it & find if it has any utility for formatting the disk. If it has one, use it to format ur disk. I think it will rid the drive of the corrupted sectors & u will be able to make new folders on it. If there is no utility for formatting THEN ONLY format it using the normal procedure.
Also check whether ur flash drive has a tab to "write protect" it....
Peace