On a 160GB drive you should see a 149 GB partition. You should not be seeing a d: recovery partition unless you created it. How big is the d partition? If you mirrored the drive from a hdd you might have inadvertently copied over an O&M recovery partition. A secure erase with hdderase will wipe all partitions (and data) and you should see the full capacity when you go to install windows.
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If you don't think you will need the recovery backup feature wipe the drive with hdderase and you should see full capacity when you reinstall windows.
EDIT: Make sure your bios is set to AHCI mode before you reinstall the OS to see optimum performance. Depending on your mobo or version of hdderase you might need to be in IDE mode to detect and wipe the drive with hdderase.