The short answer is: Use Disk Manager to repartition and format. Delete the existing partitions (if there is nothing on the drive that you want), create new ones, and format them.
The long answer is: Do you want to do this because you can't see all 2.72 GiB? If not, bye. If so, read on. Drives over 2.2 GiB have to be set up as GPT drives and not the traditional MBR format. XP cannot read GPT drives before SP2. So you will need to install SP2 if you don't have it already, use Device Mangler to reinitialize the drive as a GPT device, and then you can create a single partition if you want.
Or was that guess totally off-base?