Just to be sure we are on the same page you are trying to perform a system update through the restore menu with these hard drives correct?
Please format from a computer with the instructions below:
To format the HDD you'll need to
1.) Go to Control Panel --> Administrative Tools --> Computer Management. This has an older windows feel to it, but on the left hand side you'll see Storage, under that (you may have to click and expand it) you'll see Disk Management.
2.) Click on the expand field for the hard drives
3.) In the middle window will come up the hard drives. You should see it there (It'll likely have a series of letters, followed by numbers). You may not be able to format it into FAT32 format with it being such a large disk drive (windows doesn't like giving you any non-MS file format for large disks). But doing a NTFS format should work.
4.) Put the hard drive back in the PS3 (be ready with a USB thumbdrive with the system software on it,
5.) Hopefully, your PS3 will boot up, and prompt you to install the software on to the hard drive.
Please post back with the results you get. Thanks