I tried another SCSI HD (1GB) i got which was already formatted and it is recognised fine, including the hard drive size from "Read Configuration".
Here is another person who had the same problem with a 4GB drive, but no known working solution was detailed:
http://www.amiga.org/modules/newbb/v...=34129&forum=8
Maybe it is because my hard drive size is just over 2GB? I have WB3.1 so I thought that wouldn't be a problem?