What does the BIOS say? Back in the day, I was forever getting confused with IDE setups, but seeing what the BIOS said was often the key. Your OS HDD probably should be the master. OK, so... this is how I picture it...
Cable 1:
OS HDD = Master
Other HDD = Slave
Cable 2:
DVD Drive = Master
New HDD = Slave
Sorry if I misread and you have already done that.
Check your BIOS has all the right HDD settings, the cables are working and the correct
(I doubt speed this matters, regarding functionality, but it has been years since I dealt with IDE, so I thought I'd add it) type. The jumper I imagine will look like:
: : : :
Master -> Slave -> Cable Select -> Some other thing that I can't remember its function. (possibly compatibility for older operating systems or hardware.)
Sorry, again, if this is obvious to you or you've tried this stuff, etc.
Oh, check the pins aren't bent or missing.
Lastly, and doubtfully, it could be a software issue, in which a driver is configured incorrectly, or a setting somewhere is causing problems. I know there can be a problem with an HDD over a certain size on Windows XP, unless you first enable a certain option and install the SP1 or 2.
(I believe this might just be a data loss issue)
Anywho, can't suggest much else without knowing more, so:
Tell me/us more about what your BIOS shows.
Tell me/us exactly what your jumper settings are for each IDE device, preferably how I did above, to make things easier.
Check your BIOS settings.
Check your cable, or try a different cable as a diagnostic.
Check the pins for bent or missing pins.
Check to see (if Windows) Disk Management correctly shows your new HDD, and be sure that it has a drive letter assigned to the HDD.
EDIT:
Sorry, after re-reading your post, I realised that you already fully explained how your IDE is setup, so ignore that part of my post.
And after re-re-reading, it looks like there might be a problem with the cable or the pins, so have a gander at that.