First of all go to config drive and run the tool to config microcosmos.
The settings are the same as for cosmosex without the floppy emulation : http://joo.kie.sk/?page_id=431
You cannot format an atari sd on windows. You need to do it through atari. And for this you need a hard disk driver.
The hddriver is very expensive (the best) but still there is Petari's driver cheaper and simpler you can see on the link below the details to buy it http://atari.8bitchip.info/pphdr.php
In the meanwhile you can download from here: http://atari.8bitchip.info/DiskImgPP1.html
a ready image file to write with the windows software "winimage" on to a sd and try the microcosmos loading from a sd.
So the linux sd in PI slot and the sd with the petaris image file in the microcosmos slot
More details and tools here : http://atari.8bitchip.info/dataST.php
and more tools here: http://atari.8bitchip.info/dataST.php
Actually the site from Petari atari.8bitchip.info is a thesaurus for atari users