It sounds like the drive may have failed altogether.
You mention your OS Version (Mac OS 10.6.8 ) but you don't mention the specific system you are using. Is this a MacBook, Desktop, etc? Ideally, you would remove the drive from it's enclosure and connect it directly. Enclosures and docks all tend to use the same USB controller circuitry and thus can often exhibit the same issues when it comes to drives that aren't in tip-top shape, the sort of issues that a motherboard SATA Host Adapter doesn't experience or can at least get more specific information regarding.
Otherwise, you might try Dave's suggestion by connecting this external drive to a Windows system (and of course saying no to any format/initialization prompts) and using Disk Management and/or CrystalDiskInfo; it might tell you something more than what Disk Utility did regarding the size of the drive. As I recall, 10.6 indicates that you are using an Intel-based Mac which should allow for BootCamp operation, so you might already have Windows available for this purpose without using another system. Alternatively you can find tools like "smartmontools" that can be used from OSX.