Yeah, that is Window's fault. Is your HD Maxtor? If it is, then DL the Maxtor bigdrive registry edit to make windows see it. However, if it isn't, you can partition it and put junk on the smaller partition or even a full PC backup.
Remember though, that 160GB won't show up as 160 anyways, only about 155-154Gbs (to lazy to do math right now) because HDD makers think 1GB=1000KB, however, Windows thinks 1GB=1024KB (it is right BTW)