The boot drive jumper needs to be set to Master,and the second drive to Slave.

Is the 2nd HDD just for storage or does it hold an operating system?

If it is just for storage you need to format it first so that it is writeable and then XP should recognize it .

Go to Control Panel > Adminstrative Tools > Computer Mangement > Disk Management.Does the HDD show up? If you can see the drive,right click and select format.(i'm presuming you don't have any important data on it).

BTW you say the 2nd HDD should be D. Don't you mean E. Your CD should be D.

Also you say it doesn't appear in the Control Panel,but i think you mean My Computer.