Well, actually yes. However, for this problem, I was able to find out the root cause and then solve this issue.
Root Cause: The set top box does not detect any other file system except FAT32.
Problem: No one within the DishTV customer Care department, technicians are aware about this restriction. The manual with this set top box does not even talk anything about USB accepted capacity or anything.
Resolution: I formatted my HDD with FAT32 after which the set top box started to recognize my HDD. Although, the set top box again re-formatted my HDD in it's own format which is not recognised by Windows XP!
Caution: As Windows XP does not have an option of re-formatting the HDD to FAT32 (it only shows two options of formatting to NTFS and exFAT), I used a tool to format the HDD to FAT32.
Please go through the excellent article at the URL below which talks about various tools & options to format to FAT32:
How to Format External Hard Drive to FAT32 in Windows
I used the "FAT32Formatter" tool to format my HDD to FAT32. Using MS DOS was taking ages so I had to cancel that one. Using "FAT32Format" tool only showed me 500 GB out of 1 TB, so not of much use!