Hi Diane,
If you are booting to DOS environement on your USB, it will not be able to recognize NTFS partitions on the HD. The HD is partitioned with NTFS out of the factory.
If you have an NTFS-aware tool on your USB key, you can do this. Or, you can remove the HD from this system and plug it in as a secondary drive on another system that is running Windows (and can recognize NTFS). The Disk Manager utility within Windows can be used to create and delete partitions.
Hope this helps.