There a couple of possible reasons. Both involve limitations with hardware and software being unable to address the entire capacity of a drive that is greater than 128 GB.
First, you should make sure your Windows 2000 is upgraded to SP4. SP3 and SP4 address the 48-bit address limitation.
http://www.microsoft.com/windows2000/downloads/servicepacks/sp4/default.mspx
Here's more information on this from Microsoft, including more details and even a registry fix, although the service pack upgrade is definitely a better option:
http://support.microsoft.com/kb/305098
If you update your Windows 2000 to SP3 or higher but still have the same issue, then the problem is likely your system board's BIOS. Many older boards do not recognize drives larger than 128GB, but many system board BIOSes have udpates which can resolve this issue. So visit your computer or system board manufacturer's website for the latest BIOS available for your system. Upgrading your BIOS is referred to as 'flashing' and should be done so with great care and a thorough understanding of the instructions on how to do so.
Another way around the 128 GB BIOS limitation is getting an 3rd party drive controller, such as an IDE PCI card from Promise, Adaptec, Highpoint Technologies etc... They are fairly inexpensive anymore ($20 and up) and will give your 250GB drive full support.
A last ditch solution, there's also 'drive overlay' programs. They alter the drive's MBR (software) to trick the BIOS into reading the full capacity of the drive. This solution is not recommended as it increases potential data loss and does not always work.
A last, but unlikely possibility, is some drives have a 128GB clip jumper. Make sure you didn't set it.