P4C800-E ans Sata2 HD Problem

I have been using SATA-I hard drives. I purchased a SATA-2 hard drive (500 Gig Maxtor). I Ghosted over on to the new drive. The computer boots into XP Pro but hangs when I try to access my programs. Is the MB compatible with SATA-2? Is there a bios upgrade that is needed? Thanks in advance for any help.

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