Your Silicon Image SATA controller may support RAID 0 and 1, but that does NOT mean it cannot support SATA. I think you already spotted that, and you say it specifically mentions SATA I at 1.5 GB/s. Probably you need to do two things.
1. Set the drive jumpers to use only SATA I. This usually means installing one jumper on the right pins. MANY drives arrive with this jumper already in place so it will work no matter what. For SATA II you have to remove it. Check the drive's docs.
2. Check your mobo manual, but I would bet you have to install a driver for the Silicon Image controller using the F6 key and a floppy drisk. I think this has to be done EVERY boot-up.
Last idea from a mistake I made. In the mobo BIOS for setting up the Silicon Image controller, you must make sure it is set to NOT do RAID anything. On my mobo (ASUS, not same as yours) there were two options for "Emulated PATA" mode of the SATA drive. There was plain "Emulated PATA" and another, "ACHI", which is a more recent advanced interface system. I chose the new one. Windows XP install could not recognize the drive. After much fiddling it turned out I should have chosen the plain-vanilla "Emulated PATA" option on the controller setup in BIOS.
By the way, the original Windows XP does NOT know what to do with drives over 137 GB. You have to upgrade to SP1 at least (SP2 is the latest) to use larger drives. I believe the way they work is: if you have an XP install disk with SP2 already included, it should be just fine. But if you have the original XP, with or without a separate upgrade disk to add in SP2 after installation, it cannot handle the large drive correctly at the beginning. Maybe others with direct experience here can offer better advice if that is a factor for you.