There's a possibility that the drive was actually an 80 gig hard drive, but labeled as 250 gig. This seems to be a scam that happens every once in a while. Also, if you purchased it at a store, someone may have swapped the two drives out to get the 250 gig at a cheaper price for themselves. If the drive was actually broken, it would just not show up, or show as 0 bytes. It should never show as a smaller size than labeled unless it was a fake/swapped. In addition, 80 gigabytes is a valid hard drive size, so this just further adds to the chance it was fake or swapped.
Sometimes, they include a file on the hard drive that makes the drive look like a larger size to the OS, so when you formatted it, you may have removed this file and caused it to show its true size.