I suspect the problem is that the partition was created with XP prior to SP1. Or was it SP2...? What I would have done is made it a 20-40 gig partition, installed XP. Done the updates to SP3, then used gParted to resize the partition to the full size.
Or I would have created a slipstreamed XP disk with SP2 or 3 and avoided this problem all together.
The OP states that our TS "reinstalled Windows on a new drive". So, how could have any partition have been created with any version of Windows.
If he created a 127GB partition upon install, there's no reason to start a thread. Or, the thread would topically be more along the lines of, "I created a 127GB partition when I installed Windows, how do I get rid of it"?
Windows by default, (as you know), takes whatever HDD it finds, call its "C:/", then formats the entire drive in "NTFS". If this was only going to make a 127GB partition, it would have told you so.
My eMachines hasn't been updated to SP3, and has had drives up to 640GB installed, and recognized.
The TS would have had to premeditatedly created a 127GB partition, or the 48 bit LBA issue is what's in play.
It all may be a bit moot now, due to what seems to be a misadventure in BIOS updating.
In reading the OP, I came to the conclusion our TS is a novice. (Be that right or wrong). If I'm correct, slipstreaming service packs may be (at least ATM), outside his scope of expertise.
I don't bother with it myself, but my oldest machine is stock @SP2, and I like read what an update does, and let it out in the wild to see what happens, before I install it.`
Lastly, let's assume Windows XP (no service pack), is at fault for the drive capacity issue. If Windows is brought up to SP-3 specs, shouldn't at least the "unallocated capacity", show up in computer management?