OK, finally got around to trying this.  Turned off my PC, turned off and unplugged DNS-325, inserted new HDD, plugged all back in and started everything up.  Logged in to the DNS-325 and was presented with Disk Management as expected.  Button stating "Format the new drive as Standard type" was staring me in the face - all good.  
Clicked it, then "Welcome to Hard Drive Configuration Wizard" pops up.  Step 1 essentially tells you that you are going to format the new drive and old drive won't be touched - all good.  Clicking next gets you to Step 2 where you start the formatting process.  It seems like it starts up as it says Initializing with a 0% and a progress bar, but for some reason doesn't ever get past 0% - about 75 seconds later a pop up comes up saying "User timeout. Please login again".  I then immediately get an email from the NAS saying "System Has Rebooted From A Power Failure".  I've gone back in and checked the timeout settings - which stated 15 minutes - I changed them to 90 minutes, no help.  I am logging in as admin, but I tried to set up a user and do it that way, but I didn't get the Disk Management option that way.  I know that I've had trouble logging in to the NAS with IE10 in the past, so I tried it using the IE8 and IE9 browser modes, no help, even tried Google Chrome - same thing.
If you have any ideas, please help.