To change a basic disk into a dynamic disk
Using the Windows interface
Open Computer Management (Local).
In the console tree, click Disk Management.
Where?
Computer Management (Local)
Storage
Disk Management
Right-click the basic disk you want to convert, click Convert to Dynamic Disk, and then follow the instructions on your screen.
If you do not see this menu item, you might be right-clicking a volume instead of a disk, the disk might have been previously converted to a dynamic disk, or the computer is a portable computer. (Dynamic disks are not supported on portable computers, removable disks, detachable disks that use Universal Serial Bus (USB) or IEEE 1394 (also called FireWire) interfaces, or on disks connected to shared SCSI buses.) In addition, you cannot convert cluster disks connected to shared SCSI or Fibre Channel buses to dynamic. The Cluster service supports basic disks only.)
Notes
To open Computer Management, click Start, and then click Control Panel. Double-click Administrative Tools, and then double-click Computer Management.
You must be logged on as an administrator or a member of the Administrators group in order to complete this procedure. If your computer is connected to a network, network policy settings may also prevent you from completing this procedure.
For additional information about converting basic disks to dynamic disks, click Related Topics.
After you convert a basic disk to a dynamic disk, you cannot change the dynamic volumes back to partitions. Instead, you must delete all dynamic volumes on the disk and then use the Convert To Basic Disk command. If you want to keep your data, you must first back it up or move it to another volume. For more information about the Convert To Basic Disk command, click Related Topics.
Before you convert disks, close any programs that are running on those disks.
For the conversion to succeed, any master boot record (MBR) disks to be converted must contain at least 1 MB of space for the dynamic disk database. Windows 2000 and Windows XP Professional automatically reserve this space when creating partitions or volumes on a disk, but disks with partitions or volumes created by other operating systems may not have this space available. (This space may exist even if it is not visible in Disk Management.)
Once converted, a dynamic disk will not contain basic volumes (primary partitions or logical drives), nor can it be accessed by MS-DOS, Windows 95, Windows 98, Windows Millennium Edition, Windows NT, or Windows XP Home Edition operating systems. Dynamic disks can only be accessed with Windows 2000 or Windows XP Professional.
When you convert a basic disk to a dynamic disk, any existing partitions or logical drives on the basic disk become simple volumes on the dynamic disk.
Do not convert disks to dynamic that contain multiple installations of Windows 2000 or Windows XP Professional. When a disk is converted to dynamic, the partition entries for all partitions on the disk are removed, except for the system and boot volumes of the currently running operating system. Converting a disk to dynamic does not check for other installations of Windows, and deletes the partition entries for any other boot volumes on the disk. In addition, the volume-related registry entries in the second installation become outdated, and as a result you can no longer start that operating system.
As for the issue, I would suggest to contact MS and see what they say