Ready NAS DUO v1 Disk Upgrade

You obviously had your NAS is XRAID mode.  If it were in FlexRAID mode, you could have formatted the 2TB drive as a separate volume and then removed the first.  In XRAID mode, the system assumed you wanted the 2TB to be added as redundancy for the first drive, and it can only use 1TB of that drive for that purpose.  When you removed the first drive, you removed the redundancy, which causes the NAS to complain that the volume is degraded (missing its redundancy).  And since it's still expecting you to replace that drive, it won't expand the volume.

Unfortuantely, you also can't go back to what you had.  The initial drive is now also part of a two-drive redundant volume.

On a 4.x OS system, you can't move between XRAID and FlexRAID like you can on an OS 6.x system.  You would have had to do a factory default, which it would have done automatically if you had just removed the original drive and replaced it with the new one.  And that's still the only way you can get to where you want.  Another option would be to add another 2TB drive, whihc will sync and then grow the volume to 1TB with redundancy.

BTW, a WD green is a poor choice of drives for any RAID system due to their "intellipark" power saving system.  Using WDIDLE, you may be able to make it work better.