PS3 Help Please it is horrible?

So I have this 40 gb PS3. And of course it has ran out of space. So I decide to go ahead and buy a new Hard drive so I hope on line and get me a WD5000BEVT. A pretty little 500 gb. I make sure that I have the latest update and back everything up to my external. Do the swap. After putting it all back together I plug in the external and it will not work. So I put the latest update 3.66 on to a thumb drive and tray again. Still dose not work. So then I read that a PS3 hard drive must be FAT32. So I pop out that new little sucker and re-format it to be FAT32. It still will not work. I am not sure what I need to do now. Please help me.