Did you remember to delete any non-MSDOS partitions when in fdisk?
Also, when you boot the machine, how big does the BIOS report the drive to be? You might need to go into the CMOS to check this. Any drive settings in there would be helpful too e.g. if it's set to auto-detect, and the cylinder/head/sector counts if it shows them (basically everything on the appropriate screen).
If it's not set to auto-detect, you could try enabling that (dunno if a machine as old as yours will do it though), since manually inputting the cylinder/head/sector counts can limit the space seen on a drive - I can't remember if it limits to ~500 MB or 2 GB, but that might be the problem there.