Since it's SATA, you might have to install external drivers in order for OS installatin to work. If you can state model of your motherboard it would help.
Try going to your motherboard's website and search for SATA drivers during OS installation. When installation first runs, it prompts you to press F6 to install external HDD drivers. You will need the driver files on a floppy for this to work.
I think that is the problem. Good luck.
ASUS A7N8X-E Deluxe
AMD Athlon XP 3200+
OCZ 1GB Platinum PC3200 Rev2 Dual Channel
ATI Radeon 9800 Pro
Enermax Noisetaker 485W
2 x 80GB SATA Maxtor Diamondmax 10 on RAID 0