Have you made sure that the 40GB HDD is in th primary position and not the slave? You might just need to change the cable inside the box to have the correct oder inside there. I hope this works for you, I hope even more that I understood you correctly
EDIT: I did confirm with a quick google search that windows can only be installed on the primary partition of the primary drive, you just have to make sure that cable has the HDDs in the correct order.