I bought a 2GB chinese iPod. It shows a "Disk Error" and asked me 2 format and when I formated memory fell down to 475 mb. What can I do to retrive the original memory. Can it be retrived or not? And what had actually happened?

You probably have a ton of bad sectors on the disk. When you re-formatted it the sectors were marked as bad/unusable and now you only have about 20% of your disc left. If you can return it where you bought it then that's what you should do but it doesn't sound you bought this from a legitimate source so you're probably out of luck.

How do I format my mp4 player