I just installed a secondary hard drive (Western Digital WD Caviar SE 320GB) on my computer and after partitioning and formatting the drive, I found an empty "RECYCLER" folder in both volumes. What is this and can I delete it?

That's where the "recycle bin" is. I don't think you can delete that (It's like the "System Volume Information" folder).

If you don't want to recycles files on that drive, right click the recycle bin and choose properties. You should find an option there to control how much space is reserved for recycled files - if at all. However, I don't think you can delete the actual RECYCLER folder. Under Vista, the recycle bin is stored in $RECYCLE.BIN as far as I can tell.