Your drive probably does support it. Many people have had problems with PIO in XP. If you have already set it to DMA if available and it is still detecting as PIO mode there are two things that you can try:
1. The bios is not reporting the drive's abilities correctly. Make sure it's on auto and if that doesn't work try to manually specify. Update your bios.
2. Delete both the primary and secondary ide controller from device manager. Reboot, redect. Set to DMA if available and reboot again. This usually does it.