Fat32 has a maximum size limited of 32GB if you use regular windows tools to format it. I had the same problem, my ps3 wouldnt recognize my hdd (1tb seagate) when I tried playing movies off it through showtime.
This is how I fixed it:
Go to disk management. You can find this by right clicking my computer on clicking manage.
Find you drive. Right click it, and click, delete volume.
Then make a new parttion. Make the whole 1TB.
Choose a drive letter. Make it F.
ENSURE to select. DO NOT format this partition.
Finish.
Now, download this
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Place it in the root of you C: drive. (dont worry its not a virus)
open a cmd window.
Type:
CD /D C:\
Then:
fat32format f:
** NOTE f: can be changed with what ever letter you named your drive.
this should then pop up:
Warning ALL data on drive 'f' will be lost irretrievably, are you sure (y/n)
Type:
Y
Itll take a few seconds, whipe your hdd, BUT your done, and it should work.