VERY GOOD NEWS!
I spoke with Olive yesterday.
The newest software version (2.2 PRO, which I already put on my Olive a few weeks ago) allows you to connect an external USB Drive!!!
I tried it with my 300GB Seagate USB drive (filled with .flac files) and it WORKS! As I type this, I am playing .flac files off of my Seagate drive plugged directly into my Olive Symphony.
You can also back up your Olive's internal hard drive with the external USB drive.
They also mentioned that they are working with Apple on allowing the playback of Apple Lossless files... this is coming soon! This will allow me to plug in my iPod stuffed with Apple Lossless files to the Olive as well.
I also tried to install a 3.5" 320GB internal
HD into the Musica and it did't take. I installed the new drive and ran the Recovery CD to load the operating system, but it won't boot. I'm sure there is a way to do it (and I will investigate this soon), but now that we can connect an external USB drive directly to the Olive if we need more storage, I'm happy!
This is getting very interesting....