I've spent the last few hours researching this. I've learned about the windows registry fixes and the importance of a Mobo bios that supports the large hard drives.
I just got a seagate barracuda 7200.12 1TB. Windows sees 127GB. The Bios screen sees a 1000GB capacity, so that's right, meaning the BIOS is fine.
on the other hands, all of the windows help files say that the problem was fixed in SP1 and that doing the registry fixes after that point isn't going to do anything because of this. They want to point the finger at the BIOS, but the BIOS is fine.
So now I'm irritated. Can't figure out what to fix to get the appropriate capacity on the hard drive.
You used a pre-SP1 disk to install windows so the setup program could only see 137 GB of the drive, which it made a partition to match. You installed windows on the 137 GB partition so that is all windows sees at this point.
Go into disk management and partition and format the rest of the drive.
If you want the whole drive as one partition then you will need to slipstream SP2 into a new install disk as pat mcgroin said to do.