First of all, it wasn’t really the best idea to set up the volume size of 1TB only… The whole idea behind Drobo is the storage virtualisation and “thin provisioning” which makes the OS to initially “see” a volume much larger than the physical space available and allows the physical diskspace to be extended without messing with the filesystem extension on the OS level. You should have chosen some larger volume size - you don’t have to match it to the physical disk space available at the moment and that’s really what the Drobo is all about Hovewer, if you have chosen to create a 1TB volume only, it should create the new volumes “on the fly” for you anyway and the 350 GB drive shouldn’t be a problem - you would just not be able to write the whole new 1TB worth of data unless hard disk set would be upgraded once more. I guess something’s wrong here. Have you tried the “reset with the drives removed” trick described in the knowledge base? But I think it may be that just the disproportion of the drive sizes is too big as Dorobo tries to do relayout to protect the data stored on the 350GB drive too and it doesn’t have enough free space to “manouver” (but these are only my speculations).
Anyway, if you have time and some space to offload the data temporarily, I’d move the data somewhere else, reset the Drobo to some larger (4TB, 8TB or even 16TB) volume size (this will erase all your data!) and move the data back. As there will be affordable multi-terabate hard drives appearing (and they will) in the future, the new 1TB-sized volumes popping up on your system will be a real pain and direct contradiction of what the Drobo has been made for.