I just had the same issue with my 1 TB external, was running fine, then I installed the new firmware/smartware and it took a dump on me. Couldn''t find the drives, couldn't initialize disk drive, etc... The only way I could fix the problem was to restore my computer before I installed new firmware and smartware. Only WD driver I am using is the SES driver, no firmware or smartware upgrade.
Pulled up disk managment after the restore and was able to finally intialize the drive after a couple of attemps. I deleted the volume of the drive to one partition, one drive. Formatted in NTFS said it formatted but never did. Wasn't sure how to fix this, didn't find much in the forums so I formatted again and partitioned into two drives. One half of the partition formatted in NTSF, and the other half wouldn't after Windows 7 telling me that it was formatted in NTSF. Tried again but formatted in GAW format, which is a general format but not good for PC backup. Went from GAW format and Converted to NTSF, both partions running great, no issues.
I tried for two weeks to get the drive to work with WD's software and updates and couldn't get it to run. Hope this helps, worked for me.