"Does this mean that I can not just buy say this 2TB or this 1TB Seagate hard-drive from Frys(the only difference is the size - as far as I can tell)?"
Larger is fine but I wouldn't use larger than double the intended size.
"And, does this also mean that the web interface is not a built-in feature to the firmware? And, can it be installed later."
Not sure how you deduced this from what I said but the web interface is definately part of the firmware. The firmware is on the disks and the interface is part of the firmware.
"Regarding installing a new & blank (=void of any buffaloapplications) - is there a list of steps one need to take for theinstallation?"
Put the new HDD in and use the TFTP solution to force flash the firmware onto the unit. All of the directions for this are stickied.
"Just an FYI: everything here is related to forcing a Buffalo firmwareto a new & blank hard-drive (i dont know if Buffalo sells thoseSeagate hard-drives separately) & Not about firmware upgrading."
Right, sorry, didn't even look at the unit before responding.