When you have a brand new, unformatted (or PC formatted) disk, the first thing you need to do is to initialize it using the Drive Setup application.
Your Mac OS CD (not OS X. The OS X installer may recognize unformatted drives and offer to format them for you, but I'm not sure on this) should have a folder called "Utilities" that includes this application. When you Drive Setup, it will show you a list of drives attached to the computer. If the drive doesn't show up here, you've got bigger problems (could be a bad IDE controller on the Mac, or an incompatibility between the drive and the Mac. I seem to remember once reading about a size limit on older iMacs. Send me specs on the iMac and the drive and I'll see what I can come up with).
If you do see the drive, select it and then click "initialize". On the next window, you can either click "initialize" (which I think gives you one MacOS extended partition) or Custom Setup (which allows you to create mulitple partitions and choose what type of volume you want-- which will probably be MacOS Extended unless you have a specific reason to go with another).
