Problem Remains

I had to compile the kernel once more - I had left ext2 file system support included as a module (the default setting). Since the ext2 support module was on the root partition and the root partition is in ext2 format, the kernel couldn't mount it.

Second custom kernel booted the system fine with ext2 support built-in, but 137GB limit remained.

I may have configured kernel wrong. Or it could be the BIOS or could be fdisk. I had upgraded the BIOS to the latest version available before the building the new kernel. So I will cross BIOS off the list of possible causes.

I'll next follow these instructions for upgrading my Debian distribution to etch.