ISTM that Ontrack's Disk Manager works a little differently to the old EZ-Drive DDO I alluded to earlier. I could be wrong, but I believe the following may explain what your are seeing.
The old BIOS had a 33.8GB limitation. To circumvent this limit, Disk Manager reduced the capacity of the drive by means of a HPA. The drive then reported a size of 33.8GB via the ATA Identify Device command which is used by BIOS to determine the physical characteristics of the drive. This same capacity would be reported in any system in which this drive is later installed.
BIOS accesses hard drives and floppy drives via system calls to Interrupt 13 (INT13). As hard drive capacities increased, and new features were added, IBM's original INT13 functions were extended. These INT13 extensions enabled various capacity barriers to be circumvented, eg 528MB, 8GB, 32GB, 137GB, 2TiB. For example, 48-bit LBA support was added to get around the 137GB limit.
http://en.wikipedia.org/wiki/INT_13H
When BIOS updates are not available, as appears to have been the case with the original motherboard, these INT13 extensions need to be provided in software. To this end, Ontrack's Disk Manager installs its own DDO code in sector 0, and elsewhere on track 0. This code is loaded into system RAM at bootup and remains memory resident. Ontrack's DDO would include an INT13 extension that would enable the drive's entire 500GB capacity to be accessible. It would do this by intercepting all disc accesses (ie by "hooking" INT13) before passing them on to BIOS.
Another thing that the DDO would need to do would be to expand the drive's capacity to the full 500GB. It would need to do this by executing the ATA SET MAX ADDRESS or SET MAX ADDRESS EXT commands. See Section 4.11 of the following document:
Working Draft AT Attachment 8 - ATA/ATAPI Command Set (ATA8-ACS):
http://www.t13.org/documents/UploadedDocuments/docs2008/D1699r6a-ATA8-ACS.pdf
There are two options for these commands, either volatile or non-volatile. In Ontrack's case the volatile option is used, which means that the drive reverts to reporting a 33.8GB capacity after a power-on reset. In SeaTools' case the Set Max Capacity menu option is non-volatile, which results in the drive retaining its full factory capacity after a power cycle. The catch is that the capacity can only be changed once during each power cycle. This means that, if Ontrack's DDO has expanded the drive, then any subsequent changes by SeaTools would be ignored. Therefore SeaTools must be booted before the DDO in order for its changes to have any effect.
The problem with reducing the drive's capacity to 33.8GB is that, if you attempt to install Windows XP directly from a Win XP CD, Windows will only see 33.8GB. Instead, you would need to boot to the HDD first. This will load Ontrack into memory, its DDO will expand the drive, and Ontrack will then prompt you whether you wish to continue to boot from the HDD or the CD. If you choose the CD, then the Win XP installation can proceed as usual, with the drive's full capacity being visible.
After Windows boots, its own drivers take over from BIOS, so the DDO code is not required until the next boot.