It doesn't ask anything. The front of cable box displays a blinking light and then some characters show up on the display as it initializes. Nothing appears on the TV at all until you power up the cable box, which by then has already formatted the drive.
But I have read that you'll be prompted about formatting an external drive.
Running with the assumption that your cable company allows external drives, all you'd need to do in order to prove\\disprove that this overall scheme works is to get any SATA drive larger than 160 GB...any size at all, as long as it is bigger than 160 GB (well, remember that the Motos don't accept anything bigger than 1 TB). Let the eSATA format the drive and then toss it inside the DVR as the internal hard drive. If you see the full size, it worked! (use the "Power Off > Select/OK" trick to pull up the internal stats and peek at the hard drive size)
That alone would be huge...just knowing that this absolutely works.
The only other part is having somebody else (such as myself) test an image of the larger-than-160-GB DVR formatted drive and verify that it works.
So far we've managed to prove that sharing the image with the community will not be a problem...we just need to know that a drive formatted in someone else's cable box can work in others. And that's tricky when we're currently stuck at 160 GB for the partition size...whose to say that your cable box isn't going to immediately reformat the drive b/c it notices that my cable box had originally formatted it. Which is also why I want to stick a short recording on my DVR hard drive and upload another image. Hopefully it can help prove that your cable box isn't "rejecting" my image (it's type o, I swear...Type "o", not Type-o...oh forget it).
By the way, I've been using mostly laptop 2.5" hard drives during my tests. They work fine (though I wouldn't want to have both tuners recording HD at the same time...laptop hard drives aren't as spry as desktop hard drives). So if you have a laptop SATA drive larger than 160 GB, that'd be fine for a test.