Most likely because your boot os CD is just "XP". This limit is noted at http://www.48bitlba.com and after you install SP3 you will find you can prepare then use the rest of the space as another drive letter.
DO NOT FORCE THIS OVER THE SUPPORTED SIZE OF YOUR OS WITH PARTITION MAGIC. Of course you can try it and see what happens!
Firs of all english is not my fist landguage and i am sorry for any mistake i made so pls try to read . Im having a problem with my hard drive (model WDC WD3200AAKS-00SBA0) im runing windows xp pro sp2 my motherboard is ASUS P5B Deluxe. My BIOS finds the hard drive correctly and on the internet it says that it should have 320 gb of space. But when I install windows I can only make a patition 120 gb large (NTFS file sistem). And there is no unpartitioned space left (expept those 8 mb). I have no idea what to do i tried partition magic but you cant do anything else so please help