I too have a modded PS2 of similar model. I also tried connecting my 250 GB transcend external HDD but the same was not detected by it. But it reads my 2GB pen drive flawlessly. Infact i use this flash drive to view movies using my PS2.
I think the reason my HDD is not detected is because it is NTFS partitioned. May be a FAT32 partitoned would get detected. Not sure though. I use SMS player (load it from a CD) for playing movies / songs off the flash drive.