I have exactly the same issue with my SanDisk Ultra Fit 128 GB USB 3.0 Flash Drive. Exactly as the OP describes, in the pictures and everything.
Brand new, directly out of the box I insert it in the USB port in my computer. A message appears, “The drive needs to be formated before use” (or similar, my OS is not in english). As an answer to question by user Ed_P, no, the drive is not accessible at all. Double-clicking it in Windows Explorer leads to the format message stated earlier. Formating it does not work. I have tried several alternatives, fast/slow format, different file systems. I tried fixing/formating through Computer Management/Disk Management. Same result. According to Disk Management, the size of the drive is 64 MB and the file system is RAW. See attached pic.
I originally bought two drives and had them returned today to the retailer (upon checking, he had the same issue with them on his computer). I received two new drives as a replacement. Same issue with both of them (!).
Does SanDisk care to comment? Is this a general issue with all SanDisk Flash Drives? Does the issue relate to a certain product (ie. Ultra Fit), or a certain size?