Think I remember reading somewhere back with all the homebrew stuff that the PS2 uses a 28 bit LBA system in the firmware (in other words, can only read up to 128GB of a hard drive partition at a time). In order to get it to work with larger drives there had to be a sort of BIOS extension to allow it to read 48bit partitions on larger drives to run more advanced homebrew stuff. So, it is pretty advanced, even though it is outdated.
I think the bigger problem stems from how it puts games on the drive. It doesn't copy flat files to the drive--it puts an image of the game's disc on it. Sort of like an ISO image you make when ripping a disc to burn to CD/DVD. I don't know the exact size of the partition, so I may be wrong on this thinking--but that image size may have a hardcoded size limit of around 8.5 to 9GB--the standard size of a DVD9. This would make sense as it is more or less making an ISO style image of your game that it mounts and runs as if it was loading a DVD-9 game. There could be some trickery with an encoding method that allows for compression to squeeze more data in that image, but the physical limitation on the disk would still be the 8.5-9GB as it is determined by the number of sectors used.
If this is indeed how it is setup to run, then that cannot be changed without a firmware update to the PS2 itself, which would be something Sony would indeed need to fix first--so that would also mean there is a hard limit on how much they can store in the FFXI partition (ie, image). The only way to get around it without Sony changing the firware would be to somehow set up a Disc 2 image. To access that content, you would probably have to use a menu option to create a save file, exit the game, and boot the FFXI-2 game and load that save file--like when you switched discs in a multi-disc game.