I suspect the problem is this :
Your drive requires 48bit LBA support (because it is over 137GB in size). However, Windows 2000 does not support 48bit LBA unless you have SP3 or higher.
In theory, you should be able to install Windows 2000 SP2 so long as you don't partition the drive beyond about 120GB, so a 100GB primary partition should be fine but don't partition the remainder of the drive.
Once Win2000 is installed you can then install SP3 or preferably SP4, then use disk management to partition the remaining 60GB.
The fact that you say you can't even create 100GB partition now, suggests that the partition table has got confused. Your best bet is probably to zero fill the drive and start again.
I've attached a DOS utility that will zero fill the drive for you. If you use it, please follow these instructions very carefully :
***CAUTION - THESE INSTRUCTIONS WILL WIPE EVERYTHING ON THE HARD DRIVE, INCLUDING DATA & PARTITIONS***
1) If you don't already have a bootable floppy disk, then download one from here :http://www.bootdisk.com/bootdisk.htm
Select the Windows98se custom, no ram drive option & download it. Insert a blank floppy & run the downloaded file. his will create a bootable disk for you.
2) Once you have a boot disk, extract the files from slate.zip (attached) & copy then to the bootable floppy. Do not
write protect the floppy disk.
3) Before using the boot disk, I recommend you disconnect the second hard drive so that only the 160GB drive is connected.
4) Insert the floppy disk, power the system & go straight into the bios. In the bios make sure that the 160gB drive is correctly detected. Also make sure the boot order is set so that floppy is first in the list. Save any changes in the bios & exit.
5) The system will then boot from the floppy disk. If it asks whether you want to load CDROM drivers, you can say no.
6) Once the disk has loaded, at the A:> prompt, type the following :
slate 1 /sa
This will zero fill the drive & create a backup of the pre-zero'd MBR on the floppy. Afterwards the system will reboot. On reboot, eject the floppy & shut the system down.
7) Next, you can boot from the Windows 2000 CD & install windows to the blank drive. Remember, only partition the first 100GB of the drive