|You have not fully partitioned your hard drive. Chances are that you cloned an old small hard drive and thus it has replicated that size.|
Go into disk management and set up your partitions as you desire. Note in Windows 7 disk management you can extend your partition to increase the size of your OS partition if you so desire.
However, I think 40GB is enough for the OS unless you plan to install heavy apps that use more disk space.
I would suggest creating either one maybe two other partitions to use up your remaining unallocated disk space.
To open Disk Management, open the Start menu, In the search box type diskmgmt.msc
Disk Management provides you with the ability to carry out certain actions on partitions, such as: Creating new partitions, deleting partitions and resizing partitions (extend)
☺ When everything else fails, read the instructions.