512MB USB Flash Drive Actual Capacity

I have a Lexar 512MB USB 512MB Jump Drive, a USB flash drive. When I first plugged it in, Finder info showed 488MB total capacity with 170.1 MB in use, althought absolutely nothing was on the drive that I could see or had put there. So I formatted the flash drive with Disk Utiity. In Disk Utility I've formatted it both "MS-DOS" and "MS-DOS (FAT16)". When I partition/format it shows it will format to something like 498MB. Then in the Finder it shows as having that same and expected 488MB total capacity. I know that due to formatting overhead and byte-size calculations storage media will never have quite the actual, usable capacity stated in the manufacturer's specifications. But whenever I've copied about 318MB to the Jump Drive, it shows 488 total capacity, 170.1 free, but no more data will copy to the Jump Drive, giving me a message that file couldn't be copied because the drive is full.

I'm wondering if the "MS-DOS" partition format option in Disk Utility is really FAT32, or if it's not, if I should try booting into Windows XP and formatting the Jump Driver as FAT32 and see if that helps (I don't get a FAT32 option in Disk Utility). I can try formatting in Disk Utility with one of the many Mac OS X options and see if that helps, but I'm primarily connecting this flash drive to my MacBook and an Xbox 360, and I don't think the 360 will read any Mac OS X or straight UNIX disk formats.

Any help would be appreciated. It's possible the drive is defective, I guess, but it sure doesn't seem so. I'm not getting any read/write errors, the drive formats fine, up to 318 MB of files copy over fine, uncorrupted and quickly, and the Xbox 360 recognizes the drive immediately on start up and play MP3s and unprotected AACs off the drive just fine, no problems. I certainly don't mind getting only 488MB capacity out of my 512MB flash drive, but I think 317MB is a little weak.

MacBook Mac OS X (10.4.8)

MacBook