Toxic -- this may sound really stupid, but when you plugged in the drive for the first time did you do anything in terms of downloading software from the drive (WD Device Manager or anything else?)? Or, when the prompt came up asking if you wanted to use the drive as Time Machine you just clicked "yes" and let it fly? Also, were you using Firewire or USB? The firmware update says that you need to first uninstall the WD Drive Manager from the system. Does that mean uninstall it from the drive? How do you do that? This entire process seems complicated (at least to a beginner like me). Any help would be much appreciated (basic help). Thanks.
I didn't download any software for managing the drive. I plugged it in and when promted to use as timemachine, I clicked yes. Normally I would leave it at that, there is no reason to install something i wouldn't use. But when i found out there was new firmware, I updated that(Firmware updates are pretty important for Drive stability, and I like to update my drive on a "just in case" principal). [Define:firmware = In computing, firmware is a computer program that is embedded in a hardware device, for example a microcontroller]. (MEANING: firmware is not something you install on your computer).
I then installed the TURBO drivers from the WD website, and now since you asked I have installed the WD drive manager. But everything I installed, I installed after setting it up for timemachine and after the firmware update... But in theory you don't have to install anything if you don't want to.
If you really want the firmware update... I can't see why you would have to uninstall the WD drive manager before you update the firmware, but since the firmware update clearly wants you to, it's a pretty simple process... just open the WD drive manager install image and choose unistall. (I've attached a screenshot) (If you don't know where it is located, you can download it off the WD website)
I use Firewire 800 since it's about twice as fast as USB, and is the reason i've installed the TURBO drivers. Which makes it (as Steve Jobs would say) a screamer!
If you have any problems, just ask

because of the time difference, I will must likely only be able reply every other day :S But, I'll try to check the thread more often