The M530 has 32 MB of internal memory, 20 MB of which can be used to store images. You delete images the same way you would if they were stored on an SD/SDHC card. Take out the SD/SDHC card if one is present (so you don't delete images on the card) and turn on the camera in Review mode (press the right-facing arrow button). Use the arrows to move forward and backward in the image list. Press the Delete button to delete them and free up the internal memory.
Hope this helps!
Go to the camera's menu, and look for a "Format" option. That will erase your camera's memory card. However, it sounds like you're having trouble with the camera's on-board memory. To clear that, you'll need to delete the pictures you've already taken.
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