It could be a couple of things with the sad face, that's just OSMC's wayof telling you it's crashed somewhere along the way. I think OSMC have several versions of the image to download, I'd just check you got the right one. If you've downloaded the wrong image by accident that might be it. It could be trying to setup the pi3 version and not finding the hardware it needs. You'll be after the pi 1/0/0w version.
Are you plugging the hdd in before or after boot. Pi's are a bit tempermental when it comes to powering external drives as they need a lot of power compared to what the pi is normally running with. I've found the best way to sort it is with a powered USB hub so the hub will power the drive and leave the pi with just the data side of things. When it's accessing a drive either to read or write the drive needs more power than when it's idle and the sudden change in power can crash the pi.
When it's booting/powered on if you look in the top right corner you might see a yellow lightening bolt. That's the pi saying it wants more power. Which could be the power supply for the pi or the hdd is wanting more power than the pi can give which is causing the sad face to appear when it crashes.
I'd test booting with and without the drive plugged in. If using a hdd and not a USB stick with the pi i'd suggest making sure it's connected before boot and if possible connected via a powered USB hub. For the purposes of testing though a non powered USB hub may still help as I think the pi will be sending more power to that to keep each of the hubs ports powered than if it was idling its own USB ports.
EDIT: the original pi doesn't actually have Wi-Fi built in
that didn't show up till the pi3, if a constant internet connection is a must you'll need to look at getting a Wi-Fi dongle. Unless you can run an Ethernet cable from your router to where the pi will be running.