Hi vermonthelix,
If you are ABSOLUTELY sure the filesystem is FAT32, then you won't need to use Swiss Knife.
All you need to do in order to the HDD to work on your PS is create a folder system similar to the HDD inside your PS3. This isn't as complicated as one might think.
On your completely empty HDD, create 4 new folders. Call them
Music, Photo, Video and Game. They should all be empty. This extends your storage capacity.
To back up your data, the PS3 has a built in back up software utility. If all you want to do is back up your data, you don't need to create the above folders. Just plug it in, and back it up. If this is where the error occurs, post back and we'll see if we can solve it
Side note - Does the external HDD have anything on it? Also, how did you figure out it wasn't being recognised?