I'm not totally sure...
But in Raid 1, you can do that with 2 drives. The catch here is, they both have to be the same capacity or the same size as the smallest member. (120)
Not sure if you can used the rest of the 130 gigs... since Raid 1 is an array of 2 drives acting as 1.
Lil stumped on the wasted space, if it could be used.. it's been so long that I can't remember crap anymore. Especially this early in the morning.
I'd advise making Raid 0 for both, and using the 120 as a backup.
That also should help some.