You should not have any ssh/telnet/ftp sessions opened, otherwise the disk will be in use! Use only the webUI after a reboot, or you will not be able to unmount the disk for latter repartition/reformat.
Have you tried under Packages->Alt-F, on section "Packages Installed On", hit the "Delete" button and reboot (you might not even need to reboot)? Or if that fails, uncheck the "Boot Enabled", Submitting, and rebooting (here you have to reboot)?
On the next reboot the disk will not be used by Alt-F and you should be able to repartition and reformat it.