You cannot perform a Format on a drive while you are using it for something, Absentminded. That would be like right clicking the drive windows resides on in your pC(If you use windows) and then selecting to format it, windows would no longer work and you would not have access to the drive. Same goes for the Xbox, certain files were running or needed to be run off of E: at the time of format, so you no longer have access to E: or are able to use it correctly without a clean reinstall. The fault lies here in not MXM'x Format command, but not properly reading and studying what you were going to do with an ActionScript before using. I am not trying to come across as an ass, I am just saying you should not have so quickly pointed the finger at MXM but, rather have stated step-by-step what you did to make the problem occur. (Which you did but, the added line of MXM format screwed my HD) I am sorry to hear what happened.
To fix the problem I would suggest trying to run a game and saving it, then ejecting the disc and see if the save data is there through the M$ Dash. If it is, then you may have hope, if not then there is less hope. Anyways, install MXM into the C: drive for now and try using the allow format in the system menu and then Format the partition using FlashFXP using the site command , Site Format F:, in the raw command window. This should work I hope, if not come to the #MXM channel on Efnet and I will try to help you more from there, if you have not already fixed the problem yourself.