Sounds like you have Windows XP. Before SP2, XP can only "see" the first 130GB of the drive.
There are two things you can do. Install the XP SP2 update, go to Control Panel > Administrative Tools > Computer Management > Disk management and you can format the unallocated space there. The other is to slipstream XP and SP2 into one installation CD and reinstall XP. It will then be able to "see" and format the entire capacity of your drives. Here's an excellent program to slipstream XP and SP2: Autostreamer