I have a 2G flashdrive that I formatted in FAT32. I copied an avi file to it and the player played it with no issues. I also have a 120G IDE desktop drive that was formatted with NTFS (FAT32 max is only 2G) I copied the same avi file to it and the player would not play it.
I also formatted the 2G flashdrive to NTFS and it would see the drive but wouldn't see the avi file.
So just a warning, if you were hoping to hook up a large drive to this type of DVD player, make sure you test it out.