In order for an external hard drive to work with the PS3 (and many many other devices), it must be formatted to FAT32. Unfortunately, file systems are normally limited to 32G. However hard drives with FAT32 can actually function at much larger sizes with a little bit of hardware trickery.
That's where this tool comes in.
Ridgecorp makes a utility called Fat32Format that is capable of formatting large hard drives to FAT32 to make them accessible on older devices.
Be warned! This is an expert-level tool. Be extremely careful while using it! Double and triple check that you are formatting the intended drive before you start the process!