Man all I can find is just the standard format procedure right click and select format.
What I recommend is put your old HDD in your PS3 and then try to Format the external one on the PS3. I'm at work so I cant try it to tell you if it works or not.

@NNN2004

No prob Man glad I could help.

ok ill give that a shot thanx

Good Luck.

This is exact guide I used to change it to Fat32 step by step process. Enjoy

http://www.wikihow.com/Add-an-External-Hard-Drive-to-a-PlayStation-3

it might not be the fat32 problem...some people have found that ps3 cannot read the drive if it is on 3gb/s....you may have to change set up of the pin on the HDD to be read as 1.5gb/s....i have had the same problem...it was as if the HDD never existed...but after changing the pin to 1.5gb....it worked fine...