Solved. First Qsee tech support session could not figure it out, so escalated to level 2 support. Level 2 found the setting under Setup > System > Auto Maintain > Auto Delete Old Files. Somehow it got set to delete 24 hours. Set back to NEVER and all is good.
Seriously wondering if this unit was a return, because I certainly did not change that setting AND after the hard disk format there was about 20 GB more free space (even after 24 hours of recording).