Device size limit ?

not that I know of, 1tb is nothing these days so RB will supports it, double check that you have it formatted FAT, FAT32 or HFS and it's not NTFS like it comes out of the box most of the times

The only other option in Format was exFAT, which didn't help RekordBox see it either. Do I need to use a 3rd party formatter to get it as FAT32?

just ran into this last night on win7, didn't have time to figure out the voodoo until this morning:

http://geekdrop.com/content/how-to-format-hard-drive-to-fat32-in-windows-7-or-vista-or-in-general

oh, almost forgot:  if you are trying to format drives over 32gig, windows won't let you do fat32 on its own.  You'll need to search for and download guiformat.exe (free) then select the maximum partition size in the dropdown menu.