One common method is to set up your new drive as a slave and format/partition it. Copy your files to a partition on this new disk, and then switch it to master, reboot on the new disk and reinstall windows and your apps. Imaging software comes in real handy in these circumstances.
But what makes you think you need a new harddrive? Did you replace the board and memory with faster hardware, or just new versions of the same thing? I would recommend running a scandisk/defrag on the existing drive first.
You should also pop some more memory into the board. I would have done this first. You should aim for a gig. You're running XP, right?