A certain percentage of hard disk space is reserved by the OS. Part of this is for the system restore. You can change the amount of space reserved for system restore but at the risk of fewer restore points. Anyway for a 320GB hard disk it is impossible to get the entire amount for storage, probably 300GB will be available. It's a percentage of your drive capacity. For 120GB probably 105-110 will be available.
If this is not your problem, then use a tool like Partition Magic or Acronis Disk Director to view your partition details. There may be some unpartitioned free space that you can add to your existing partitions.