Sounds about right - you lose some because of how they write the size, and some more because part of the drive is taken up for system stuff
If you ever buy a HDD for your PC you will find a similar "shrinkage", that the advertised size is never what you actually get when you plug it in. Hard drives are advertised at their size in bytes, but because computers go up in steps of 1024, rather than 1000, you lose some space (so 1GB is 1024MB, 1MB is 1024KB, 1KB is 1024bytes)
120GB marked drive = 120,000,000,000 bytes
Divide through 3 times by 1024 gives you 111.75 GB
Then you lose some space to MS taking part of your HDD, which on the 20GB is about 6-7GB.
Take that off and you are left with 104-5GB of space on the Elite, before you start filling it with demos, games, music etc.
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