|Post the full model of the laptop.|
I assume at some point in the past you upgraded your hard drive then?
I the 250GB hard drive a SATA or IDE?
If the CD you have has SP2 on it and you still only show 137GB then your motherboard is not 48 bit LBA compliant.
WinXP SP3 should have 48 bit LBA compliant drivers included.
I suggest you install using the slipstreamed CDR and select custom installation. When the screen prompts you about the partition to install to you need to delete the partition and create a new one using all available space. Hopefully that will be around 233GB, which is correct for that 250GB drive. If you only have 137GB to install to then you may still have the same issue.
At that point I suggest you proceed with the install anyway. After completion, go to Device manager and look at the hard drive controller driver. If the date is 2007 or 2008 you should be good to go.