no i have tried a 1TB iomega USB 2.0 and it worked fine. I have the same problem with my Boxxebox; and at the boxee forum I'd been told that boxee doesn't support more than 2.0 TB so I'd have to partition the drive. And i hoped that i would not need to do that with the DNS -320
a quote from the boxee forum:
Apparently it was not the total partition size that was the problem, but only the size of the sectors used for storage allocation. The traditional sector size is 512 bytes, and apparently that is the only size our current Boxee firmwares can handle. And that is why they can't handle some of the new large drives which have a larger sector size (8 times larger in the example above, with 4096 byte sectors).
So these guys either shopped around for a drive which does use 512 byte sectors, or found a way to reconfigure a drive to use such sectors instead of the 4096 byte sectors it was preconfigured to use.