Olive has released an updated version of their firmware which, among other things, allows the unit to automatically format a backup drive to their preffered format, FAT32.
This will hopefully aleviate some of the issues users have been having, especially since Windows doesn't directly format disks as FAT32. Until now, an external (but readily available) third party tool had been required.
But no more! Simply plug in your drive of choice and Olive will handle the rest. It is worth noting though that the old rules still apply:
the drive must be as big or bigger as the total size of the Olive hard drive
You will lose any and all data on the drive.
To get the new update, make sure your Olive is connected to the internet. Go to Settings > System Services > Software Update
Follow the on screen instructions and you should be away laughing.