This sometimes happens when you have an old dos formatted drive with your PC. You may need to re-partition the drive, and then format it. This will delete all of the data on that drive, but will allow you to use the full capacity.
To access the Windows XP partition manager, do the following:
Click Start, and then click Control Panel. Click Performance and Maintenance, click Administrative Tools, and then double-click Computer Management.
Be 110% sure that you select the correct drive when doing this, otherwise you will loose all of your current data.