this is what i would do, if theres nothing on this hd worth saving, which i assume theres not by the size. I suggest getting a win98 startup disk booting the machine up using it and using the fdisk command. You can partrician the whole hard drive with one single partrician. Then format and use it for whatever you want.
If it still only lets you use half the drive check what mode you have the hardrive in. Ive had it autodetect hds and assign it to LBA when it should be normal, and it cuts the size to 500mbs. That was a real nutcruncher when i finally figured it out.