I think this is an old friend come back again, LBA, Logical Block Addressing. Depending on:
your version of Windows (which means you need to get the latest service pack),
your BIOS,
your IDE controller,
One or more of these is not supporting beyond 28-bit addressing, so you max out at 2^28 sectors *512 bytes/sector = 137,438,953,472 bytes = 128 GB (where 1 GB = 2^30 bytes = 1,073,741,824 bytes).
Something in your system is limiting addressing to 28 bits.
Have you enabled LBA in the BIOS?
How old is the motherboard? Can it even support LBA?
Make & model of ALL hardware would make this less of a guessing game
from a old surveillance recorder.
This article gives much relevant information
http://support.microsoft.com/kb/305098