My new computer's hard drives on the fritz.

Your BIOS is only recognising them as 128Gb drives, so you're not seeing all the space. I'd suggest updating your BIOS and your drivers - if that doesn't work I'm afraid you're stuck (under windows - Linux would see all the space!)

It may be worth checking the back of the drive to see if there's a "128Gb Clip" function on them - I suspect not, but worth checking.

you didn't say if these were PATA or SATA drives
if PATA you might try changing the drive detection in
bios from AUTO to LARGE or try imputting the drive spec's
manually. but most likely a windows proplem ( didn't see what
OS your using.
SATA drives means a proplem and most likely
a bios update to try to solve

Oh, sorry.

They are SATA drives.

Aside from what is already mentioned, if you are installing a version of XP that is not service pack 1 (sp1) or later then the OS can't see it:
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You can simple upgrade to SP2 and create new partitions or if you have to have a 250gb c: drive then you can create an SP2 install disk by slipstreaming your current XP cd with the network installer of SP2

Also, if you enter the bios it should tell you what it size drive it is seeing. That will narrow it down to hardware vs software. Personally I would make sure I had the latest bios regardless in addition to SP2, it's good to keep it everything updated.

Doolittle got it right. Install SP2 and your problems will go away.