Yes you can, i did on my powermac 9600 and i can confirm its at 2.0 speeds.
PS. I tried a small 500MB USB stick disk to test the storage size issue and still no luck
Run Software Update. There's one called "Disc Burning" or "Authoring Support" or something along those lines that I needed to install before my G3 could see my external DVD drive (just to read!). You may be having the same issue.
Edit: I decided to stop being lazy and actually look. It's Authoring Support 1.1.9.
Did you check if your USB card recognizes any USB devices (mouse, keyboard etc)? USB stick should be recognized, even formatted with FAT32.
Did you do this in OS X? Mac OS 9 will not support USB 2.0.
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I don't see any obstacle to being able to read the drive, unless the USB card or PCI slot is defective. If you can't read two different devices on the USB card, I would be concerned it is defective.
Can you attach a keyboard or mouse to the thing, and get that to register on your Mac?
Try opening disk copy and reformatting the drives.
Perhaps you should reformat the drive on Mac OS X (10.4 or higher) with Disk Utility to make sure the the Drive partition map scheme is not GUID (Intel-Mac) or MBR (Windows) but the old Apple format (Apple Partition Map).
Drive SetUp may or may not support the drive as it is. You should open up Drive Setup, have it scan your busses, and see if it shows up as a supported drive. If it does, then partition and format away. If not...then try it the OS X way.
a g3 will take up to a 128gb hdd it should still accept 250 gigs but it will read it as 128
You should probably try something else then, like a USB Stick or File Sharing using an Ethernet Network.
Try this way (kinda reverse than you've tried before): http://www.ehow.com/how_8537774_detect-drive-mac-os-9.html
Create 2 partitions on WD drive first (on another computer). Single volume size limit for OS 9 is 200GB, so do not exceed that. Mentioned 128GB is IDE controller limit and it does have nothing to do with USB or firewire drives. 200GB is OS limitation, though.
You should get more luck with USB stick, I think. External WD drives, such as MyBook do have specific firmware/partition setup, which could be an issue for OS 9.
That is because of the IDE controller; a USB card removes that limitation.
Hey at this point, I'm thinking you need a change in strategy. We are going further and further down a road that doesn't seem to be yielding any results...
Assuming what you have on the drive is valuable (to you), and assuming your time is worth something, I would suggest getting something like a USB to IDE/SATA adaptor (something like this: see random product at Amazon webpage
You can then pull the drive out of the beige G3, hook it up to the iMac, and voila!
There are plenty of different devices like this at Amazon, and all between $20 & $30. If you get one that reads IDE drive and SATA drives, you can use this again in the foreseeable future.
Just my suggestion...
UPDATE:
Got the IDE/USB2 adapter today.
which is faster to copy data: USB 2.0 or Firewire 400? (Not going to ask about FW800 as I suspect the motherboard or USB2/IDE adapter is bottlenecked at USB2.0 speeds)