The one you linked goes to a $50 buy it now on ebay for me, for that model number. If it helps you feel better, I'll list one amazon, and list it for $10K....
The only reason you see this drive listed for higher than average is because some people just have no clue that you can use any hard drive. They search "TiVo hard drive", and sellers know this. There is NOTHING special about it.
As for you using your old hard drive, and people telling you not to, its not because of the cost. Its because of how unreliable they are when you compare them to a 3.5" drive. Adding an external drive also makes it so that if either of the two hard drives goes bad, you lose everything. Its not worth it, especially one that's so small. You are adding very little space, but adding a very big risk. All it takes is one cable and a little searching for the right threads to make that a single drive. Once you do that you can upgrade it to a much better drive