Why would you want a System partition of that size anyways? If you ever have to reinstall Windows again… everything you had on the drive would be lost(if you don't backup frequently).
Much easier, and more convenient, to create a smaller System partition with the rest as data storage. Install only Windows to the System partition, and everything else to the data partition. That way, if you do need to install Windows again, just reformat the System partition and reinstall Windows to it. You will of course have to reinstall all programs and what not, but at least you won't lose any data that way.
What kind of hard drive is it? Who makes it? Have you checked the Manufacturer's website to see if they have something like
Maxtor's Big Drive Enabler?.
Also what kind of Motherboard is in your computer? If it has an Intel Chipset(these verions only: 810, 810E, 810E2, 810L, 815, 815EP, 815G, 815EG, 815P, 820, 820E, 840, 845, 845E, 845G, 845GE, 845GL, 845GV, 845PE, 850, 850E, 860) on it, you can probably use
Intel's Application Accelerator to fix that as well.
I still suggest installing to a smaller System partition(mine is set at 10Gigs). You could then update Windows to whichever SP you wish and you would be able to format the rest of the drive in any way you chose through the Disk Manager in XP.
If you boot from the Windows install CD, it will take you through the install process. I don't suggest installing Windows overtop of your current install, that can get very messy. Better to do a clean install(format the drive, then install) in which you can choose the size of the System partition.