Incorrect Hard Drive Size

Got a 160GB Western Digital. Pluged it up. Started up WinXP SP2 and it sees it as 32GB NTFS. WTF? If I boot up with the CD that came with the HD, it recognizes 137GB NTFS. WTF? How can I get the other 15 or so GBs?

The computer is a HP Pavillion 503w. The 160GB HD is being used as a slave. The master drive is something like 40GB and split into two partitions. The nonbackup partition is about 32GB.

Considerations:
It has WindowsXP Service Pack 2 so it shouldn't have the 137GB limit.
It was purchased after 1999, I would think the BIOS are suitable for >137GB.
Even ran a BIOS update from 2003.

Additional info: C: is NTFS, but D: is FAT 32. Again C: and D: are partitions on the same HD.