How Do I Recover From A Degraded RAID Mode?

I have a MyBook World Edition II (blue rings) that appears to be defaulting to RAID degraded mode. The inner and outer LED rings are flashing alternately, indicating that it is running in RAID degraded mode.

How can I tell which of the two drives inside the unit is at fault, or should I replace both?

The HDDs inside are 500GB capacity, WD Caviar SE, WD5000AAJS. I understand that the Caviar Blue range of HDDs are replacements for these, so a direct swap replacement model would be WD5000AAKS, is that the case?

If I decide to replace both HDDs, can I replace them with a larger capacity drive, for example the 750GB Caviar Blue, WD7500AAKS?

Is there a published list of compatible HDDs that I can use as replacements?

Hello freind did you ever get this issue resolved?

have you tried contacting WD tech support on that issue?