I just did this and it does work.
This is what I did:
open unit
remove old 500gb drive
put new drive in
put back together and power on
close the error
goto settings rescan drive (May get error, because Sony has not formated)
goto settings and restore factory defaults
Here is the drive I used from Amazon, I am sure others would work, it's just a laptop sata drive: http://amzn.to/1HTZIEd
bet a ssd drive would work also.