How do you mean, "the harddrive doesn't work" ? Can you see it from the BIOS ?
I don't think that interrupting a low-level format will physically damage the disk, but it might leave it in an unusable state.So you probably should try running it again and leaving it until it has finished.
Although most manufacturers recommend that you never do this in the first place...
As to replacement drives - small capacity hard drives are getting increasingly rare - I had real problems finding one under 8Gb when I needed one recently
You might be able to find one on ebay.
If it's of any use, I have a 270Mb Fujitsu drive sat on my spares shelf that I'm not going to use again. It was last used about 18 months ago, and I think it still works. If you can't ressurect your current drive and you'd like it, send me a Private Message with your address and I'll send it on to you.
You may have to google for the settings to use in the BIOS - they're not printed on the drive itself and I don't know if I still have the spec sheet. It's a model M2681TAM.
You're going to have a lot of hassles trying to put any modern Linux distro onto a 40Mb drive anyway - even the 1997 Slackware/RedHat/Debian CD set I have recommends at least 100Mb. You will certainly be limited to command-line only stuff.