Next, I suggest
1) backup your data
2) update the firmware to the latest version ( Optional but strongly commandeered:)
follow the manual instruction: with latest version :
*When the replacement hard drive is recognized, the status LED will flash red. The TeraStation will start rebuilding the RAID array automatically.*
with older version
*Drive -> click the RAID array and select the new drive* next push rebuild raid. See manuals for details.
see this faq for more information