The biggest IDE drive is APX 750GB that I have in my Xbox
You are not limited to that though, you can install much bigger drives but you would need a SATA to IDE convertor, that you can get small enough to fit inside the Xbox
Default drive is only 8GB, but no matter how big the drive is the Original Xbox Dash will report 5,0000 blocks free so that is not an accurate space left display
The xbox will not work with all drives though, partly depends on the mod chip, but normally the drive needs to be able to be locked to work correctly with the xbox
http://xboxdrives.x-pec.com has a very nice list of drives you can/can't use including both SATA and IDE drives, I just went IDE to save any complications as not all SATA to IDE convertors work.