I would assume that the kernel modules necessary for detection of usb external hard drives aren't loaded by default. According to the Lunar wiki which is somewhat dated:
After loading the kernel, the first screen presents you with a few options. If there are extra modules you need to load in order continue with the install, they can be loaded here. There is also a shell option.
Try switching to a shell to see what modules are loaded by running:
You may need to manually load the usb_storage module with modprobe.