If you want to format your Memory Stick Duo memory card while it is inserted in the Sony Ericsson phone, you may get an “Memory or Application In Use” error.
The correct way to format the memory card is to first change the USB port mode on the phone to File Transfer mode while it is disconnected from the Windows PC. Then connect the phone to Windows PC. It will be visible as a Disk Drive in Windows Explorer. Right Click and format it.