I have an Olympus Camedia C-150 and have a 16mb XD card that came with it. I have recently bought an Olympus XD M 1GB card to use with it so I can store more photos. When i put it in and switch camer on it asks format or power off. I select format. it then asks yes or no. i select yes it says caution erasing all ( there is nothing on it) so i do, and it bleeps continuoysly and says card error.
When i connet my camera to the computer and select the drive, even with camera switched on it does not recognise the device with this card in
I too have an Olympus and in the camera instructions it tells you what size of cards it will take. It is probable that the capacity of your 1 GB card is too large for your camera.