for some readon fdisk was only showing me 80gb hardrives as 12.34GB , so there has to be something in your problem
the partition you created must only of been noticed as 12.34gb
the way i got around it was that i downloaded an windows Me bootdisk from click here
and created a partition with fdisk and it recognized the 80gb hardrive and formatted it, but when it formatted it,it only recognized 12.34GB when it was formatting, so i continued with the format and when it finished and i installed windows it recognized the 80gb hardrive
my advice to you would be to use a windows ME bootdisk (not 98) and partition with fdisk make sure it recognizes the 120gb when you create the partition it should, then once that is created format it..
or maybe just boot of the windows cd