MacBook saw this hard drive as 125GB one, 8x less than 1.0TB, which would indicate there is a problem with the Advanced Format. When I put that HDD into a WD external enclosure it was the same, wether via USB2.0 or FW800, still the 1.0TB GUID Partition Table (GPT) wasn't recognised and it was ready to format it in 125GB claiming that Partition Table was "Master Boot Record".
I really like the way Lion works, so I will stick to it via that USB2.0, for now. Once I cloned that installation I am using for work, I will put that hard drive inside MacBook and I will try to format it again, but when it is plugged via SATA.
Edit: Final result of this exercise is that all is working fine now. The drive needed to be formatted when connected via SATA inside the MacBook Pro. Happy days.