hi , i worked in hardware repair b4 and i can tell you all that will be done in that situation
follow these steps
in this situation we need to check if the lost space is dropped from partitioning or hidden or media lost its capacity or the media is damaged
these are 4 things to check
1-i'll start with the worse , you said windows is still working but the space is still lost , so the media is ok and your hard disk is not damaged
2-to check the media if it has hidden partitions or lost capacity
right_click my computer>manage>disk management
see if there is unallocated disk space
a-if there is right click it and Create partition
b-if there isn't unallocated space and there is partition but without drive letters right click them and use change drive letter
c-if there isn't any more space unallocated or hidden then move to step3
(follow these links for more information , and i suggest you print them
-http://support.microsoft.com/kb/313348
-http://support.microsoft.com/kb/309000/
-http://support.microsoft.com/kb/307844/en-us
)
3-(pls, don't do any thing you don't understand) this is the most simple but hard part in the same time if your disk lost some of its capacity we need a tool to reset the hard medium size and here i'll tell you about the easiest tool which is : MHDD
-http://www.softpedia.com/get/System/Hard-Disk-Utils/MHDD.shtml
-http://mhdd.ru/download.shtml
-
you can find it here or any where all over the web , or it's included in hirens boot cd if you have one it will be great http://www.hiren.info/pages/bootcd
all you need is to assure that your disk is master or in sata0 or sata2 these are the only ports mhdd use
when you run the program choose the disk and at the prompter type: nhpa and press ENTER then y and y and you will have your disk full capacity
if you want to keep data i suggest you to try partition magic to check your partitions after finishing or try partition table doctor will be greater than partition magic in keeping data or restoring partitions from un allocated space ( google these if you want to know more)
(if you want to fix some bad sector in mhdd type scan then make the last option (on) and click CTRL+ENTER, it will scan your disk faster by thousands of times and repair bad sectors.)
if nothing works just return it to the one ho sold it to you if its new the he has to replace it for you