If correct, you'd likely only want to use a thumb drive of up to 16GB formatted as NTFS (so watching a BluRay rip of more than 4GB won't work). Really Microsoft? Really? WTF.
It also appears to use only FAT32 (why,whywhy?)
I don't know if there is a drive limit size for the PS3.
Both drives support a different method and that is using a networked device that can act as a Media Server (probably needs to be DLNA certified). Apparently it can't just be a networked hard drive it must be able to act as a media server.
I haven't looked around but you might try looking at Western Digital and see if they have any networked devices that can act as Media Servers. Your setup would look like this:
1) ROUTER (may be installed in a Gateway/modem device)
2) use either wi-fi or Ethernet (may be able to have one device on wi-fi and another on Ethernet). Wi-Fi may be too slow to stream high-def video.
3) XBox 360
4) Media Serve capable network hard drive device
The Western Digital "My Book Live" may be the best device for streaming media throughout a house. It is compatible with computers, the XBox 360, PS3 and other devices:
I own a PS3, and I can definitely say external drives MUST use FAT32. I don't remember what the size limit is, but I do believe that FAT32 can be up to 2Tb so I'm sure the PS3 can probably use 2Tb. I can also say that the PS3 does support DLNA.
Windows has a limit to the size of it's FAT32 volumes. I used this utility to create a 300 gig FAT32 partition that I use for my PS3 backups, music, and movies.