You said when you put the old drive back in, system recognises that - is the old drive standard ATA with windows installed on it?
Correct me if I'm wrong but it sounds like you are trying to install windows on the s-ata drive without a standard ide drive in the system.
If so, when you install XP from the CD, you need to press F6 in the setup screen to install scsi/raid controllers. You should then be able to insert the driver floppy disk & install the s-ata driver.
If you can't create this disk from the CD that came with the card, go to this link to download it instead. (I'm guessing you have the 1205SA card as 120sa doesn't seem to exist :
I suggest if you still have problems with it, then boot windows from your IDE drive & see if you can install the driver for the card from there.