Problems reading 2TB USB HDD on Server 2003

Hi all,
this is driving me nuts...
Fresh windows 2003 SP2 setup.
5 x Buffalo 2tb external USB hard drives
It worked for me a few day ago with no problems. I was able to read and write.
Yesterday I went to configure backups and this is what is happening:
Drive detected in device manager
in disk manager comes up as basic disc with partition of 1863.01GB but doesn't say NTFS and so has no drive letter. when clicked on properties getting error message "The operation canceled due to an internal error" . If I try format partition diskman locks up. I can delete partition ok. Tried creating a small 500Gb partition but still having same issue.
I can read USB memory sticks ok.
All 5 hdds are behaving the same way on server. All 5 are perfectly workable on another computers W7, XP.
I have tried re-installing chipset drivers - didn't help.
The only major change I can recall since it was working - ESET Antivirus was installed, but I don't think it could be a problem...
Please Help
 
Usually you will need a 64 Bit system to be able to read any drive with a total compacity of over 500 gigabytes. If possible I would suggest upgrading to Windows Server 2012 in order to fully take advantage of your TB drives.
 
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