In response to both Tesa and Griegoe.
The problem that you are having is with your system BIOS. As far as losing space in the translation from the Manufacturers Gigabyte definition and the OS definition. You should only loose 7.37% of your space. On a 40 gig drive you will loose appoximatly 2.95 Gigs.
If you BIOS is recognizing the drives at 32 you can format them at this capacity but you are not using the full capacity of your drive and if you move this drive to a system that is able to see past the 32 gig limit you may have to repartition to see the full capacity. Now of coarse you will also have to remove the 32 gig clip that you have put on the drive to make it recognize. In my opinion if you pay for a 40GB drive you should not sell yourself short by using only 32gbs though. Also you are not going to set your drive manually to the 40 gig as the largest drive you can set manually using CHS is 8.4 GB. After that the drive sizes are determined by INT 13 or LBA.
Here are three solutions to your problem ranging from best to worst for your particular situations:
1. Purchasing a serperate IDE controller. For this I would probably go with a Promise ATA 100 controller as currently these are going to be the best value. This will allow you to not only see the full capacity of your drive but it will also allow you to use your drives at ATA 100 which you will definatly notice the difference in terms of speed.
2. Update your system BIOS. You can check with your MB manufacturer for an update for your BIOS to get past the 32G limitation. You MB manufacturer may or may not have an update for this, it will really depend on how old the board is. This will allow you to get past the 32Gb limitation but you will still be limited speed wise by your onboard controller.
3. Go to the drives manufactures site and download their installation software or use a 3rd party such as Ontrack Disk Manager.
I would first check the HDD manufactures website as their utilities are usually free to download. What the software will be doing to get past your limitation is installing a "Drive Overlay". This is a software fix that allows your system to see the full capacity of your drive. This is not an actual fix but more of a band aid.