as ACOLYTE says about 4 gig is the usual for a full XP + SP2 install though i have put winxp on a 4 gig drive before and still had room for officexp.
28gig is definitely wrong, even with the loss of space due to formatting and an installation of windowsXP, you should still have around 145gig left
your drive is stuck in the 136 gig windows limit (service pack 1 or 2 take care of this problem)
that would make sense numbers wise, if you hover your mouse over your C: drive in My Computer and take a look at the numbers. if it says Total Size = 136 gig then thats where the problem lies. If it says 28gig used then thats another thing.
it might be possible there is a hidden partition taking up the other space or it just hasnt been set up to be used.
just some ideas to play around with, let us know what you see.