A logical drive is a kind of partition on a basic disk (i.e. a disk with a regular MBR partition table). If the only option for new partitions on a disk is to create dynamic drives, it is probably set up as a dynamic disk. You can't create a logical drive on a dynamic disk.
The Disk Management tools included with Windows 7 can convert an empty dynamic disk back to a basic disk.
Of course, as usual there are ways to do this without having to reformat, but be careful.
See: Converting dynamic to basic disk