I don't think he can do that since he has Windows on the small
partition. You have 2 choices here. First, you can make a new
partition (which will show up as a second hard drive in My Computer) and
that will allow you to use the rest of your hard drive space. I would
recommend this over the second option as you keep all your data and
don't have to work as hard. To do this, you just right click on that
unallocated space and create a partition with it using the max space
available. It should get a drive letter (probably either D or E)
assigned to it, or you can do this manually by right clicking on it and
changing the drive letter.
Your second option is going to be to boot off your Windows XP CD, delete
the partition, create a new partition using the full disk space, then
format it (NTFS is highly recommended), then install Windows XP. Be
sure to back up all of your data before using this method as ALL of your
data WILL be ERASED.