WinXP does not natively support 48 bit LBA which is why you have experienced the 137GB limit. To enable XP to see drives larger than 137GB you need to have at least SP1 or higher applied as mentioned above.
http://support.microsoft.com/kb/303013
If you have an XP install disk, with no service packs, you can slipstream SP2 into the install CD to be able to partition the entire drive upon installation of the OS.
http://www.winsupersite.com/showcase...slipstream.asp