yea, you can boot off the cd and reformat it there. you can't format c: from inside windows no matter what privileges you have. that would be like deleting yourself. haha reformatting takes some info too, and it deletes the entire hard drive.. deleting the info for reformatting would be bad. thats why they do it with a cd or dvd.
or, if youve got another computer you can just pop the drive in, and reformat it from inside a different windows installation. thats what i do sometimes, to reformat a friends computer or something. i just pop their drive in my computer.
make sure you dont install windows in the other comp though, you'll want windows to install devices (while your putting it all back on) for the computer you want the drive in.