You can't really format a message you receive in Outlook 2003. However, you can hit Reply and format the whole text in your reply document.
This is a macro I use to create margins in the Outlook text:
Sub IndentAll()
Application.ScreenUpdating = False
Selection.WholeStory
With Selection.ParagraphFormat
.LeftIndent = CentimetersToPoints(2)
.RightIndent = CentimetersToPoints(2)
End With
Selection.GoTo What:=wdGoToPage, Which:=wdGoToNext, Name:="1"
Application.ScreenUpdating = True
End Sub