I need a little push on the subject. Basically what I am trying to do is
take the image from a 40 gig drive, which compressed is 1.1gig and drop it
on 80 gig. It images correctly with no problem but it leaves 65 gig of
unallocated disk space. Is this by design or is their something I can do?

If this helps, its 6.5 sp2 zen

Also I am manuallly doing the image with all the 4 partitions checked in the
Zen PXE menu.