SanDisk cannot be read

My client had a Win95 machine. He bought a USB SanDisk to upload images from his digitial camera to his PC. I had to upgrade his computer Win98SE due to USB support. I installed the SanDisk software, restarted, plugged the device in and Windows recognized it. It shows up as Removable Disk (D:) in My Computer, but when I put the little floppy in the drive, it tells me it cannot be read/accessed. Then I try to format the little floppy, and it tells me that Windows does not have enough memory to do it.