Erase should do it. Does the HD show up on the left in Disk Utility? Sometimes it will show the HD and then underneath it in hierarchy you'll see the partition of the drive. Click on the upper-most hard drive listing and you should see another tab called Partition. There, you can specify partitions if you want more than one partition in your computer. Unless you're dual-booting with something else, you shouldn't need to do this. Some people actually create two partitions to hold X and 9 seperately, but I don't think it's necesary. All you need to do is select Erase and you should be good.
If you are going to have OS 9 also for Classic mode, then be sure that when you format it that you select to include the Mac OS 9 drivers so that the drive can be recognized by OS 9 and Classic mode under OS X.