No don't format the disk in the pc, If you have replaced no disk you should get the first disk replaced, That is your issue most likely, If the unit is in warranty, contact buffalo support for a replacement. If it is not in warranty, order a new drive roughly the same size, If you can find the same model for cheap go for it. If not just get any drive that is the same size of storage, Most of the drives are 5400RPM i believe so if you want to get a drive with better specs like 7200RPM, more cache, etc. You can, You can even get a bigger drive if you want, I won't go past 3TB drives as 4TB drives start to run in to compatibility issues once in a while.
You can upgrade both drives if you want but, you need to first replace the bad drive. Format the drive in the linkstation, Make sure it is visible and working, then power down the unit, replace the second drive, power up, format that drive in the link stat, make sure that one is visible as well, and then build your array, and bam, bigger storage.
(I hope your using the Newer LS-WXL and not the older model) You can tell by one being black and the other being black with a silver square front and a grey metal back. If its the older model I believe the biggest drive you can use is a 500GB