Yeah, you are supposed to format it to FAT32. If you still can't get it to work after that, I might try getting a new SD card. I've had this issue before, and I've been able to fix it by either formatting it or buying a new one.
I'm gonna get out a PayPal MyCash Card probably tomorrow so I can buy a few 2GB SD Cards for my Wii, sucks that I have to LetterBomb it again, since I factory reset it, and possibly another Wii, used from Super Mega Replay, a local Electronics resale store. That way, we can definitely determine if it's a console problem or an SD Card problem. Old Wiis at Super Mega Replay cost $49.99, not much for a previous-gen system. Nintendo pretty much prevented us from having any fun with the Wii Mini or hacking it. No SD Card support, no Internet support, I don't think they have GameCube controller slots either, so Brawl would probably suck on it IMO.
Update: Unfortunately, I had to buy a new Wii. I bought three 2GB SD Cards from Super Mega Replay yesterday, and they worked on my old laptop, which doesn't read my initial card anyomre, but it appears that my halfway-corrupt initial SD Card confused my original Wii, and now it doesn't think an SD Card is inserted anytime, even when it is. My new Wii reads SD Cards, I Smash Stacked it, and I'm back to hacking again!