Well, if I understood your problem correctly, you have a relatively new drive (40GB) and an old 'puter without ATA66/100/133 support. You'd want to improve HD performance by getting an ATA controller card. If that's the case, you should be able to hook the drive up to a controller card for better performance without any need to reformat/reinstall.
Of course, a new IDE controller won't bring you additional disk space on its own (you mentioned you are low on disk space). If the prob is that you have a huge disk but your rig has only been able to use about 40GB of it so far (e.g due to <A HREF="http://www.seagate.com/support/kb/disc/tb/bios_limit.html#33_8" target="_new">the 33.8GB BIOS limit</A>)...well, I dunno. A controller card might let you use the whole capacity of your drive. In that case the basic approach would be to reformat/reinstall everything. However, apps like Partition Magic might let you expand the size of the partition without data loss.
I hope this helps.
<font color=red><b><i>You want WHAT on the #$#%## CEILING?!</i></b></font color=red> -Michelangelo