FAT32 doesn't support partitions of 1GB or higher, in fact you were lucky to get 420GB.
You need to use NTFS if the PS3 supports it (which I doubt), or make do with 420GB, or buy a smaller capacity drive for your PS3 and use the 1TB one for your PC.
FAT32 supports 2TB with a sector size of 512Kb. That's not the problem.
Connect the drive to your windows machine and goto disk management. Is there only one partition? And the rest is unallocated?