IBM Microdrive 4GB will work, but D70 doesn't like any CF Cards over 2GB, - especially the thin ones.
In theory the D70 should be OK with cards more than 2GB, so it's possible the card has been pre-formatted in FAT16 mode which limits the usable memory to 2GB. You should try formatting it through the camera (as opposed to a computer) which will format it in FAT32 mode that theoretically allows up to 32GB.
If it still gives problems then could be a compatability issue especially if you are using a third party card not approved by them.
The D70 has known issues with certain cards / capacities. Nikon has identified the cards and capacities that are guaranteed to work with the D70 specifically, on their page dedicated to this info linked below:
http://support.nikontech.com/app/answers/detail/a_id/9601
It seems that only Lexar and Microdrive cards that are 4Gb are supported (some with significant limitations) and no card greater than 4Gb is supported at all, regardless of manufacturer.
As it turns out, this is a known problem with the original Nikon D70 cameras, and Nikon USA has a service bulletin out on the camera body. They'll repair it free of charge.279 views
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