I had that problem too. I just unplugged the slim loader and closed the program, and restarted it and hit format again. It worked the second time.
You can also start NeoPowerKit and delete the file that is written with NeoMax when the formatting failed, then add some small homebrew ROM or something and burn it in NPK. Then go back to NeoMax and try format again.
The moonshell that is currently built into NeoMax is old, 0.4 did not have video support, only MP3 and images.