run hddhackr again, hddhackr -f, and then put into 360 to format. when you restore, try to restore the files from the image, not the image itself.
Make a backup image of your 20 gb orig drive if you need a backup image.
That works for me and a few others.
1st step, flash hdd with 120gb hddss.bin, you can verify that it works in your 360 at this point. (It should)
2nd restore 20gb image to newly flashed hard drive with xplorer360 (to get emulator partition on drive)
3rd flash hd again with 120gb hddss.bin, (you don't need to make an undo this time)
4th put hd in xbox360. Should recognize it now, but only show 13 or so gb free.
5th format hd in xbox360. will show all available space, (should be ~107 I think)
6th use xplorer360 to restore whatever particular files to 360 you want. (not the image...)
These steps work for me, there may be easier methods, but haven't seen them yet.
It helps to leave your hd sitting in the shell until you know everything works.
Good luck