With some devices, real SCSI drives as well as devices emulated by SCSI2Pi or BlueSCSI, you can configure the SCSI level supported by the respective device. You should always prefer the latest available level. If, for example, your device offers SCSI-1 or SCSI-2 compliance, configure it with SCSI-2. Anything older than SCSI-2 is not recommended. New levels usually yield the best results in terms of compatibility, not only with TT or Falcon SCSI, but also with ACSI. Newer SCSI levels than SCSI-2 are also fine, because the SCSI software protocol is backwards compatible and HDDRIVER is aware of higher levels. The TT/Falcon SCSI hardware and ICD-compatible host adapters support any SCSI command of any SCSI level.
HDDRIVER and HDDRUTIL dynamically detect properties of SCSI devices and intelligently adapt to them. If possible, they make use of some advanced SCSI commands newer than SCSI-2, in order to optimize the performance and the user experience.
The SCSI level supported by HDDRIVER's SCSI emulation for IDE/SATA/ATAPI drives and by HDDRIVER's SCSI Driver target interface is SPC-3, by the way, which is much newer than SCSI-2.