what Service Pack does you CD have?
I think you need SP1 for Windows to create partitions larger then 131GB.
Create a 120GB partition, install XP, update to SP3, and use partition software to increase the partition size from 120GB to 250GB.
Thanks for the reply Emerald - I ended up installing the OS in a 30 Gb partition and after I installed all the updates and service packs, created a 220 Gb partition/logical drive (D:) for SageTV storage and program installation.
I have never had luck trying to expand a current "system" logical drive to include unpartitioned space.