There are 3 issues with drives larger than 4GB. The first is scsi.device, the second is the hard drive prep utility (HDToolbox), and the third is FastFileSystem.
OS3.9 fixes all of these. If you can use 3.9's HDToolbox (which may require you making and then booting from a 3.9 Emergency Floppy), then you can prep the drive and install a filesystem that will allow you to use all 8GB. Your boot partition must be within the first 4GB of the drive, since the 3.1 ROMs need to be able to identify and boot from it in order to load the updated 3.9 modules.
If you're staying on 3.1 it gets a little harder. You need to patch scsi.device and FastFileSystem, and you need a different prep utility - I use HDInstTools in these cases.
Easiest solution? Use a 4GB Flash card instead - no patching required. 
It'll still be a huge upgrade from your 500MB drive.
I can related to this... I just used two Transcend 133X 8GB cards in a dual-CF Syba (from Amazon) case.
I have a 512MB DH0: partition on one (bootable), 3.9 fully installed with Boingbag 1, 2, & 3, and a ~7.2GB partition left as DH2: (DH1 was my DLG BBS back in day, so DH2 is habit for me.) The third CF partition, DH3: is 7.7GB, and it's another Transcend card.
Both use FFS. I can verify that if you do early startup, the system can only see DH0. I'm just now getting back into the Amiga scene after not having regularly used one since around 1997 (I used my A1200 in college from 1993-1997), so I still have yet to dig through the startup-sequence and the user-startup. Boing Bag 3 did have me run some fancy setpatch arguments. I did my install under UAE, so I don't even know if it did the right stanza for my A1200.
From the installer for BB 3:
(if (= (exists "DEVS:scsi.device" (noreq)) 0)
(working
(cat "You should add these lines to the start of S:Startup-sequence:\n\n"
"SYS:C/LoadModule L:FastFileSystem L:RAM-Handler L:Shell-Seg LIBS:icon.library LIBS:workbench.library NOREBOOT REVERSE\n\n"
"SYS:C/SetPatch SKIPROMMODULES fs,icon,ram-handler,shell,workbench QUIET\n\n"
"and remove the existing SetPatch line."
))
;else
(working
(cat "You should add these lines to the start of S:Startup-sequence:\n\n"
"SYS:C/LoadModule L:FastFileSystem L:RAM-Handler L:Shell-Seg DEVS:scsi.device LIBS:icon.library LIBS:workbench.library NOREBOOT REVERSE\n\n"
"SYS:C/SetPatch SKIPROMMODULES fs,icon,ram-handler,scsi.device,shell,workbench QUIET\n\n"
"and remove the existing SetPatch line."
)))
So, does anyone know what exactly *enables* the larger file systems in the 3.9 startup-sequence so that the system sees them? Is it one of the setpatch commands, above?
