i've got a WD 120gb hard-drive and it works fine with my PS3. with all the firmware updates it'll play 90% of the files i throw at it. sorry, sounds like it's the 'brick'!
PS. when using my PS3 menu it'll say 'no titles available' when i press 'X' but try pressing triangle and select 'all titles', works for me! of course if your harddrive doesn't appear on your PS3 menu at all you're out of luck!
good luck.