This is actually something that causes quite a bit of confusion, and it's all down to the meanings of the various prefixes used.
You see, in most computing circles, 1 kilobyte is equal to 1024 bytes. However, as I'm sure you are aware, the term kilo is usually a reference to 1000 of anything, and that is how hard drive manufacturers define a kilobyte.
In effect, this means that Windows will report a drive smaller than what the manufacturer quotes. There's nothing wrong with the drive, it's just an inconsistancy in the definition of "kilo" (and all the other units).
[ For all you fact fans out there, 1024 bytes is strictly speaking called a kibibyte. Anyone who uses BitTorrent will probably have come across this already. ]
