I have the current firmware from this month, but have not checked external drive access on it yet.
I looked in the manual to see the Reset button is on the bottom of the device. It says pressing it will reset to factory defaults, does that mean it goes back to factory installed firmware?
No it stays with the same firmware, it just resets user settings to defaults. If you have a problem, resetting can sometimes cure it. Fully boot up your player, press the paperclip / cocktail stick button for a couple of seconds and then release. On releasing the button the player should reboot.