Lame i know...but I just cant find the option to remove a party member.

Click on the face on the left hand side of the screen and then click on reform party.

Go to the character page, where strenght and all that stands, go to the button named reform party, and then you can throw out all you want!

Press '<font color="lime">R</font>' to go to your Record screen, you will find a <font color="lime">Reform Party</font> button there. Click on it and select the portrait of the party member you want to boot and click the done button.