For the SATA-drivers please have a look at this thread:
Installation of Windows XP Home/Pro/PE - FAQs
Concerning the capacity of your HDD, first you have to take into account, that a HDD labeled with 250GB actually has only about 232GB of storage. But this doesn't seem to be your problem.
I don't know, if your capacity is limited due to missing SATA-drivers. You can check this in the Bios by searching for something like
compatibility mode in connection with your HDD-settings.
Another reason could be, that your Bios doesn't support HDDs bigger than 128GB. If this is the case, you will need to update your Bios to use the whole capacity.