512Mb SD Card is telling me it needs reformatting

Check if the Card lock is on/off

If you just purchased this camera, you can try phoning place of purchase or make a trip there. It sounds as if the software in camera may be messed up.

What type and size is your new memory card? The V603 works with MMC and SD cards, 2GB or smaller. It will not work with higher-capacity SDHC cards.

If the card is more than 1GB it is probably an SDHC card. SD and SDHC cards fit the same slots, but many cameras won't work with the SDHC (high capacity) cards. SDHC is not backwards compatible.

I don't think anybody makes SD cards that small anymore. I haven't seen one smaller than 512MB in at least a year. However, the C330 will use any SD card, so you should be able to find1GB or 2GB SD cards at just about any department, electronics, or office-supply store. Many drugstores and supermarkets also carry them. Just be sure you get an SD card, not an SDHC card, as SDHC cards will not work in the C330.

Your card might be protected.
Please change the position of the lever on the SD card.

Your camera has been designed to work with SD cards up to 1GB but in my experience there are often compatibility issues with different brands of SD cards especially when they're right on the limit of what the camera can handle.

You've said what batteries you've tried, but they will not affect how your camera behaves when trying to format an SD card.

I'd recommend first trying to reformat the card in an external reader (you may have to try reformatting in FAT 16 and then in FAT32 to see if it makes a difference: alternatively contact Kodak to ask which one to use as they don't say which in the published technical specs for your model). If this doesn't work then my next suggestion is to try a previously unused (i.e new) example of another brand of SD card; as they're so cheap you may want to do that anyway. You're safest to assume that a Kodak branded card will work, and SanDisk are also very widely compatible on "problem" devices. If either of these cards do not work then you'll find that the manufacturers are both very supportive in trying to resolve your issue, although ultimately you may discover that you actually have a faulty camera.

make sure that the memory card you bought is a secure digital (SD) memory card. the kodak memory you have might not be an SD card.

http://www.mymemory.co.uk/compatible-memory/Digital_Cameras/Kodak/Kodak+EasyShare+C330_Memory_Cards

First try formatting the memory card in your PC and then try again. If that fails, purchase a new memory card of a different brand / manufacturer.