Could it be that the following article applies to your situation?

http://support.microsoft.com/default.aspx?scid=kb;en-us;303013
Windows XP SP1 includes 48-bit LBA support for ATAPI disk drives.
With this support, you can use hard disks that are larger than the current
137 GB limit.

Haven't had the problem myself, but I was SP1 before I put in my 160GB drive
as a data-drive.

drive; my original one is c: and my CD drive is e: all of the jumpers on the
actual drives are correct- i don't know what else to try. can someone help
me please?

Try what george said. Install SP1.
If you already have SP1, try putting the new drive on a seperate
channel. You could remove the CD-ROM temporarily so you can boot from
the original hard drive. If this works, try having your CD-ROM as slave
on the second channel.
Failing this, if you shop around you should be able to find an extra PCI
IDE controller for about the cost of a network card.

Looks like your HDD is not partitioned.

Go to: Start Up > Settings > Control Panel > Administrative Tools > Computer Management > Disk Management, then click on Disk 1 and follow the screen.

If your Windows Explorer recognizes the HDD but not more than 128-137 gB you will also have to install SP1