Ian, My 2006 Xserve running Lion Server is configured with a internal 1TB boot drive and an internal 2TB drive. The 3rd bay is empty. I do not have either software or hardware RAID set up on this server. As I mentioned, I have a 2TB USB drive running TimeMachine backups and a Drobo Gen 2 4 bay via Firewire 800. I have 3 Xserves and they are all set up like this (all 2006 models) but without the Drobo. Hope this helps.