ND2730 doesn't support formatting small size capacity internal Drive.

if you want to use exFAT file system, we recommend you using more bigger internal Drive.

The battery power system of ND series cannot provide the necessary power to run SSD during data write. SSD needs a lot more instant current during data write which ND series cannot provide.
Some SSD may work, but some may not. Specailly 1TB SSD might not work well at medium or low battery stage.

See here for the internal HDD recommendation.
http://www.nextodi.com/support/view.php?bbs=en_faq&id=32

This apply to every ND series.

Does the ND-2901 provide less power to the internal drive than the ND-2730? The ND-2730 works great with the Crucial 960GB M500 SSD. Write speed in 80MB/Sec. and battery life is enough for copying 420GB. HDDs seem so archaic, being slow and fragile.

Yeah, this is my second SSD in a NextoDI Product and I've never had issues with battery power.. Not really sure why that was mentioned.

Back to the original question: So you're saying that I can't format a drive as small as 120GB to the exfat format? Is there a size threshold I must pass?

IMO it needs to be larger than 128GB but not sure

For small capacity SSD, no problem using SSD both at ND2901 and ND2730. But large capacity, i.e., 512GB or more, needs lots of instant power during the operation, so it makes slow down the card copy speed or even fail.
This can be solved if you use external battery(optional) for ND series.

Back to the original question: So you're saying that I can't format a drive as small as 120GB to the exfat format? Is there a size threshold I must pass?