Pretty much any USB hard disk will work fine. It needs to be FAT32 formatted for the player to recognise it, however, most external hard disks are factory shipped with the disk formatted in FAT32. A 2.5" USB HDD has the advantage of being half the physical size of a DVD case (for the WD passports I've used) and not requiring a power supply, however some 2.5" models (especially DIY kits) require two USB ports to power the hard disk.
All you need to do is plug in the hard disk, then plug it's USB cable into the receiver and this should enable the satellite receiver's built-in PVR features. I'm not sure if any preparation needs to be carried out on the hard disk first and whether it has to be blank, so to be on the safe side, I would suggest reading the manual section about the PVR features before hooking a USB hard disk up to it.