Well, I spent the day working on this drive problem. Hopefully some of what I learned can be of benefit to others.
First of all I still don't understand what went wrong and I'm not out of the ball park yet, but making progress.
Lots of reading and no help from Western Digital although the tech was nice, his remedies were not on target.
I found a product (FREE) called Ultimate Boot CD for windows. I downloaded the zip of the ISO image and burned it to a CD. It is a huge collection of disk drive tools. After many tries and experiments I found one tool that worked and was able to revert my drive back to factory out of the box settings. Surprisingly, Western Digital didn't have anything like this for download. The tool I got success with is MHDD. But there are a few tricks to using these tools. The first one is to install the bad drive in the laptop, not the USB caddy. Then boot from the CD using F12 key at powerup. Then find the MHDD program in the CD and launch it. It helps if you have a basic understanding of DOS because this stuff all runs in DOS. Being an Old fart has some advantages.
The first thing to address in MHDD is to erase sector 0000 on the disk to dump the Master Boot record. Next using a dos command I reset the LBA number to the factory default and save it to the disk. A quick check of the drives parameters now shows the drive is ~320Gb raw size.
Before the LBA was about 1/3 that value.
I pulled the drive out of the laptop and put it back into the USB caddy and reinstalled the original 120Gb drive.
Now here's where I believe I made my mistakes earlier. When I tried to clone and upgrade the drive to the new WD 320Gb drive. I didn't run the clone program from DOS. Even though the clone software claims to be windows and can run from windows. It doesn't work and created a corrupted clone that matched my partitions exactly from the original drive. I noticed that this time when I did the clone launching the software from a boot CD with it copied to the CD, I got a listing of the new partitions indicating it would default to appropriately larger partitions all totaling nearly 295Gb. It's working now so we'll see if the drive is cloned like it should be.
I must say that if you fool around with drive recovery, this CD is a nice thing to keep at your fingertips.