LOL 64Bit Version!?
Sorry let me laugh that suggestion off HAHAHAHHAHA
Windows only has a Beta version of the 64Bit out, and it is not stable and it is not good, + ur pc is 32bit as you said.
Anyway onto your drive problem, each version of windows is released with support upto a certain drive storage capacity.
And on Windows XP Home and Professional by default they will only recognise 137GB, install windows XP pro onto your 250GB hard drive which is being recognised as a 137GB and then once in windows you will need to download a small program that will be provided by the manufacturer of your hard drive, this will enable "Large Hard Drive Support" ie: 137GB or more, hence why it is not being recognised
If you bear with me i will post back with your hard drive specifications and the link to the program you need to download, and how to go about running it (its usually just double clicking

)
Have 2 go into meeting brb
*Edit u

BigB, i wanted to be the hero.. u internet solving / posting bot from the future argh!
As BigB suggested you will need SP1 or SP2, however.. you do not HAVE to have them, u can just do what i suggested, although having the latest Service Packs is a V.Good idea.