USB Format Failed

I am trying to create a Windows 7 USB boot drive out of a USB stick. It is 1TB and comes up as General UDisk USB Device in my device manager. I am using Rufus 2.10.973. Once I press start, the format begins. It sits on "Clearing MBR/PBR/GPT structures…" for a while before displaying an alert:

Error: Error while partitioning drive.

What to do?

I am using the following settings in Rufus:

Device
(E:)[1TB]
Partition scheme and target system type
MBR partition scheme for BIOS or UEFI-CSM
File system
NTFS
Cluster size
4096 bytes (Default)
New volume label
WINAIO

Format Options
Check device for bad blocks (Y, 4 Passes)
Quick format (N)
Create bootable disk using (Y, ISO Image)
Create extended label and icon files (Y)

Advanced Options
List USB Hard Drives (Y)
Add fixes for old BIOSes (extra partition, align, etc.) (N)
Use Rufus MBR with BIOS ID (0x80 (Default)) (Y)

The log is as follows (note: cleared before pressing start):

Format operation started
Requesting disk access...
Opened drive \\.\PHYSICALDRIVE3 for write access
Will use 'E:' as volume mountpoint
I/O boundary checks disabled
Analyzing existing boot records...
Drive has an unknown Master Boot Record
Volume has an unknown Partition Boot Record
Clearing MBR/PBR/GPT structures...
Erasing 0 sectors
write_sectors: Write error [0x00000079] The semaphore timeout period has expired.
  Wrote: 0, Expected: 512
  StartSector: 0x7a11ff80, nSectors: 0x1, SectorSize: 0x200
Could not reset partitions
Re-mounted volume as 'E:' after error

Found USB device 'General UDisk USB Device' (048D:1234) [GP]
1 device found
Disk type: Removable, Sector Size: 512 bytes
Cylinders: 127482, TracksPerCylinder: 255, SectorsPerTrack: 63
Partition type: MBR, NB Partitions: 1
Disk ID: 0x00000001
Drive has an unknown Master Boot Record
Partition 1:
  Type: Small FAT16 (0x04)
  Size: 976.6 GB (1048576000000 bytes)
  Start Sector: 0, Boot: No, Recognized: Yes

Can you try with Rufus 2.9 (which you can download here)?

I know there can be an issue affecting Windows XP users during the clearing of the boot records. Your screenshot seems to indicate that you are not running Rufus on XP, and also your error code is different, but it might be worth finding out if you problem is linked to the changes that were applied in Rufus 2.10.