If you can see the drive in Disk Management, you have the tools you need. On the right side of Disk Management there are two scrolling windows; the lower one shows you the devices installed, whether they are all ready for use or not. It should show your 1 TB drive as a unit with one Partition plus a bunch of Unallocated Space. RIGHT-click on the active Partition you have already and choose to Delete it. If there are any other Partitions on the same drive (NOT ON YOUR BOOT DRIVE!), Delete them also, until the entire drive is Unallocated. Might be wise at this point to reboot.
"Low-Level Format" is not what you want; in fact, that term really is for a procedure done when the HDD is first made, and difficult for end users to do. To get a new HDD ready to use there are two steps, often covered as one procedure in a utility package, but Windows disk Manager does them separately. The first is the create one or more Partitions - each of these will be treated as a completely separate drive with its own letter name. A HDD MUST have one Primary Partition, and MAY have additional Partitions if the Primary does not use all of the drive's space. Any space not allocated to a Partition is Unallocated. A Partition (primary or not) may be bootable or may not be - your choice. A bootable Partition is flagged in the disk's MBR so it can be found and it will have some essential files installed on it for basic booting. You most certainly can create one (Primary) Partition on a drive that uses ALL of the space on the disk.
After the Partition(s) is defined, you must Format it, and this is where you specify what File System the Partition uses. Most large drive users today will choose NTFS for several reasons. There are two limits imposed by the older FAT32 system, but some users (like you) need to use that system for particular reasons. The two most significant limits of FAT32 are a limit on the maximum size of each file, and a limit on the maximum size of the disk (Partition) you can use. The latter limit can be changed, and Swissknife is one utility that can do this. The FAT32 system reserves a fixed space at the beginning of the disk for its File Allocation Table where it keeps track of which Allocation Units are used and how they link to the rest of their files. Now an Allocation Unit consists of a specified number of disk Sectors, and a Sector is always 512 bytes. Microsoft had certain numbers of Sectors per Allocation Unit they used for Formatting FAT32 disks, and this created the limit on maximum disk size. However, third party utilities like Swissknife can use larger numbers of Sectors per Allocation Unit to allow keeping proper records for a very large drive. The trade-off is that ALL files will have space allocate to them in large chunks, leading to a little more wasted space when this is done. Today, the waste is usually not a big deal because the disk is huge, anyway!
So if you want to create a single large Partition on your new 1 TB drive (after deleting all the old ones) you can. And from what I see, Swissknife may well offer to combine in one operation the creation of the Primary Partition AND the required Format operation. You have to use Swissknife to Format that Partition using the FAT32 File system, and you'll need to find where to make it use up all that space. It is done by setting the number of Sectors in one Allocation Unit (may be labeled something like Allocation Unit Size), but that detail could be hidden from you. I don't know Swissknife's user interface - maybe it just asks you how big this drive is, and figures out for you how to set up the FAT32 system. When the two jobs are done you reboot and Windows My Computer should see it ready to use.