It looks as if the last segment of the hard drive is damaged.
Why don't you create a partition on the hard disk by using fdisk.
Set the partition at say " 80% ". This will allow you to use about 5Gb of the hard drive. Make this "A" active and disregard the last 20% of the drive. You could then format the drive in FAT32. A more suitable file allocation table than fat16.