Rugby Boy, Most if not all of the 4GB and 8GB players on the market are actually much smaller chips hacked so that they appear to be 4&8GB. Usually they start having problems when you start loading and using more space than the real drive has. When you format them you remove the hack and end up with the real size being revealed i your case about 128MB.
This will help you find out the true size of your memory chip.
http://www.mympxplayer.com/viewtopic.php?t=401