Oh it's Windows XP, i forgot another thing...
SP1 or SP2 can only recognize 125gb of hard drive space by default, upgrade to Service Pack 3!
Or do this:
1) Open Control Panel
2) Open Administrative Tools
3) Click Computer Management
4) Click Storage, then Disk Management
5) You should see if there's other partition to remove here including the Win7 Boot if not already removed.
6) Then you will see your C: Partition, right click on it and click Extend Volume.
7) Then you will see the rest of the unallocated space, extend your C: Partition to the full hard drive capacity.
Then click finish, and allow it to extend your C: drive.