WD elements works 100%. Here you have a nice compatibility list:
And forget FAT32. You have a nice guide on how to format your HDD for Wii here:
You basically use a special Wii programm: 'WBFS manager' (google and download it), and format it from there to WBFS format. I have over 100 games already on it and it works awesome through GX loader or Neogamma...
After you will format your HDD you basically just load the game.iso file on the disk through WBFS manager and woila... happy playing.
And if you have a large HDD (1TB for example) i suggest you create a few partitions, as many as you like (2x500GB, 4×250GB or whatever) because you probably won't fill up the entire 1TB with games, and the disk is unusable for other stuff if you format all of it to WBFS.
Create 4×250GB (it's all in the guide link above) and format only 1×250GB to WBFS and if you'll fill it up, then format another one...
And i also suggest you install Mplayer. You can then play almost anything from your external HDD through Wii (even flash videos work great) (files have to be stored on a non-WBFS partition though).
I wish i had seen this thread before i bought my SD card Y_Y
Thanks for the links....I usually use my 360 to play my vids on TV....I just want to play my back-ups...lol....