Okay - here it the final result of my testing.

I pulled the disk out of the enclosure and removed the IDE to USB
interface card. I plugged the disk into the PC directly. Bingo. It is
detected immediately as a 250 Gig disk, formats correctly and works
beautifully.

So I reconnect the IDE/USB I/O card again and whilst the disk still
reports having a 250 Gig formatted partition, it now says the disk is
2048 Gig in size (and that I have 2048-250Gig unpartitioned space -
sorry, too lazy to do the maths :) ).

It appears to work fine like this .. until you do any sort of
repartitioning/formating, in which it then stops working again (no
doubt due to the PC thinking the disk is 2048 Gig in size).

So, my final conclusion is there is either some fault with the IDE/USB
I/O card or it requires some sort of driver. I looked everywhere for a
driver and all indications point that WinXP SP2 does not require one.
Therefore, my diagnosis is that the interface card is faulty.