I also have a new DNS-323. The first thing I did (after plugging in 2 Seagate ST31500341AS, 1.5 TB drives) is upgrade to fw 1.06.... I didn't bother to try and format these hard drives with fw 1.05 or 1.04.
After upgrading, I loaded factory defaults (in case it matters) but all of the disk format options were grey'd-out and I couldn't select them to format the drives. When I first logged in, I was never presented with the option to format the hard drives (except for the very first time, when my DNS-323 was still running firmware 1.04).
However, I discovered that after power-cycling the DNS-323, and then logging in again, I did get back the initial screen that gives me the options to format the hard drives (JBOD, Raid 0, Raid 1, etc).
I selected the Raid-1 option (with firmware 1.06) and like many other people, the format progress got stuck at 94% complete.... I waited a few hours, still stuck at 94%. I tried several other things, such as clearing cookies in MS Internet Explorer; I tried a fresh installation of FireFox, I even tried another computer; it would always get stuck at 94%. I didn't seem to matter which browser I used, or what the cookie settings were.
SO, I then decided to 'shutdown' the DNS-323 again, made sure it was powered-off, and then powered it on again. At my first login, I again go the initial welcome screen that gives me the option to format, so I selected Raid-1, etc, and again it got stuck at 94% complete.... I left it that way for close to 24 hours (I just got busy with other stuff).... meanwhile my computer had auto-logged me out (maybe that prevents the completion screen from updating???). Still stuck at 94% complete format.
At this point, I again decided to 'shutdown' the DNS-323, made sure it powered-off and then powered it on again. At my initial login, I no longer got the format option, however, I was able to map a drive letter and it seem that my DNS-323 had formatted my 1.5 TB drives as was using them in Raid-1 configuration. I wanted to witness a correct and complete format, however, so, I went to the tools menu. This time, the format options were not grey-d out and I was able to select options to reformat my drives as Raid-1; I also set my login to not auto-logout. Within less than 1 hour, the DNS-323 had reformatted the hard drives as Raid-1 and indicated 100% complete.
However, I realized that the format type is EXT2 (but I want EXT3). It seems that the EXT3 (journal file system type) feature was removed a few firmware versions ago. Any idea why?
I hope that this post helps some of you with the 94%-complete problem.
M.