My partition menu in Disk Utility is greyed out in recovery partition

Question

So upgraded to yosemite and after a while decided that i would do a clean install of it because it didn't update the recover partition and i could no longer boot into Ubuntu partition. So i made my bootable drive and booted into it. I was met with:
When i clicked on the hard drive in the sidebar that it was only 300gbs, which is the size of my os x partition.
I then went to the partition menu and i could not change anything there. I can't resize anything or repartition anything.
I've tried to do multiple things in terminal from recovery and bootable disk but to no avail. It still won't work. The thing is that when i type diskutil list into terminal i get
/dev/disk0
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *500.1 GB   disk0
   1:                        EFI EFI                     209.7 MB   disk0s1
   2:          Apple_CoreStorage                         300.0 GB   disk0s2
   3:                 Apple_Boot Recovery HD             650.0 MB   disk0s3
   4:       Microsoft Basic Data                         1.0 MB     disk0s4
   5: 0FC63DAF-8483-4772-8E79-3D69D8477DE4               195.0 GB   disk0s5
   6:                 Linux Swap                         4.2 GB     disk0s6
/dev/disk1
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:                  Apple_HFS Macintosh HD           *299.6 GB   disk1
/dev/disk2
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *500.1 GB   disk2
   1:                        EFI EFI                     209.7 MB   disk2s1
   2:                  Apple_HFS MacBook Pro Back Up     398.2 GB   disk2s2
   3:                 Apple_Boot Recovery HD             650.0 MB   disk2s3
   4:                  Apple_HFS Back up of files        100.9 GB   disk2s4
/dev/disk0 is the internal hard drive that i want to reformat, /dev/disk1 i don't know what that is. It could be an internal thing in the drive? And /dev/disk2 is my external hard drive that is running mavericks that i writing this on.
I've tried resetting PRAM and SMC but that didn't help.
Didn't know if reinstalling the OS would help?
What i want to get is to reformat /dev/disk0 so that i have a 500gb hard drive that i can then do a clean install of yosemite on and then possibly make an ubuntu partition later. PLEASE HELP!!!

Answer 1

And, this was from the Internet Recovery utilities window, right? OK, this next suggestion depends on which MBA model you have. Check the link below. If your model came with Lion pre-installed then it is capable of using Internet Recovery. If it came with a late version of Snow Leopard it can be upgraded via a firmware update. You will find this in the link below.
Computers that can be upgraded to use OS X Internet Recovery
Be sure you backup your files to an external drive or second internal drive because the following procedure will remove everything from the hard drive.
Boot to the Internet Recovery HD:
Restart the computer and after the chime press and hold down the COMMAND-OPTION- R keys until a globe appears on the screen. Wait patiently - 15-20 minutes - until the Recovery main menu appears.
Note: You will need an active Internet connection. I suggest using Ethernet
            if possible because it is three times faster than wireless.
Once the Utility Menu appears select Disk Utility and click on the Continue button. Now try removing the partition again. If you have the same error, then do the following:
From the screen's menubar select Terminal from the Utilities menu. Enter the following at the prompt:
     diskutil list
Press RETURN. You should see a display of your devices. Next enter:
     diskutil unmountDisk force /dev/disk0
Press RETURN. Now, if this works your internal drive should be unmounted. Return to Disk Utility and try the process of removing the partition.