Thank you DBone for your answer. I appreciate it, sounds like we are having similar experiences to some degree. I got it all sorted but their were two similar, yet different issues with my system. The first was that I could not cancel the removal process, had to perform a a hard shutdown. Once it was up and running (light blinked blue for about 3 hours- guessing chkdsk) a conflict, I tried it again, same result, although I stopped it after 4 hours. I then restarted the server and stopped all processes like you stated (twonkey, media sharing, anything that was running!). Alas, almost success, I got a list of files that were having issues, a couple conflicts corrections and an I/O'd file manual delete and poof it finally finished.
So I think the second issue is that during a removal of a storage disk, WHS stops the backup processes and stops access to shares, but does not halt [enough] services. When you are "removing" a disk it seems like you would not want media collector and any other such apps running on the disk you are trying to remove. While I did take a look at the task manager, I did not take notes. I suppose it would be hard for me to recall exactly what I checked and what I saw, I do know that for me, manually stopping the extra services allowed me to remove the drive successfully, when previously it had failed twice.
I cannot completely fault WHS, as I knew about the "failing" disk and had been putting off buying one until I saw a sale. Money saved sometimes does not equate to a saving overall. 
PS I now rather loath the advanced format drives, but that is for another post! It works, but it was a learning "experience".
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