This is actually a very old issue, but I was not aware of it until today. I recently bought a new PC with an Intel motherboard fitted with a Core i5 650 processor, 2GB RAM and a 250GB SATA drive. I'm going to use this box as a VMWare server running multiple virtual machines.
I initially wanted to run VMWare ESXi on this box. Much to my dismay, ESXi works only with very selected motherboards/chipsets/drivers and won't correctly work with the onboard Gig-E network adapter. Installing an external PCI network card also does not work. It seems that ESXi can only work with built-in network adapters of specific mobos (mostly branded ones from Dell, IBM, HP and the like).
So it looks like I'm stuck to installing a Windows server OS and then use the VMWare Server. I tried the minimum server -- Windows 2000 Server. After installing Windows 2000, the installer only detected about 128 GB out of the total 250 GB SATA drive. Strange. I did some research and it seems that circa Windows 2000, ATAPI/IDE drives were only about that size because Logical Block Addressing (LBA) were only 28-bit.
To support large disks, one needs 48-bit LBA. I installed Win2k's Service Pack 4 and modified the registry key EnableBigLba as instructed in http://support.microsoft.com/kb/305098. After that, it saw the rest of my drive already! Yehey!
Anyway, this whole exercise was moot-and-academic as I decided to eventually install Windows Server 2003 Enterprise Edition as my host OS for VMWare Server.