Are you trying to install windows 2008 on top of the windows 2003 partition you just tried to installed or not? if so, you won't be the first.
However, it won't work. if the server does not have an dvd drive, use another pc that do and transplant the new hard drive, to the production server, when it reboot (warm boot) after it expands all that files.
Basically, windows 2008 does not copy files in a fresh install (if you boot clean, not bootstrap from windows, and is babysitting the installer as opposed to using some RIS). The files are ON the disks, windows installer only expands it. Moreover, you want a fresh install if that's the only disk.
IF you still think there's a problem with that hard drive, especially if it had been previously used., there's a fix to convert a protected partition on dynamic disk back to basic disk:
http://www.wilderssecurity.com/showthread.php?t=191006
OR you can get gparted, they made ports of those for windows, too.
Formatting any number of passes won't convert it back to basic. It's only basic if it's fresh out of the box with no previous windows server partitions on there.
When I had an one of my xeries 445 boot off an sata drive, I had connected the drive a desktop and did the required operation (see above). only then could it be used.
You can connect an SAS hdd to an desktop SATA controller. the rest is just basics.