sp_spaceused @updateusage = 'true' actually corrected the problem. Now I can see the database size is 439.25MB and unallocated space is 117.34MB

Wondering why the unallocated space grown to the extant...

Sp_spaceused gave result as -

HRS   439.25MB(Database_Size)  -3861.59MB(unallocated space)

4351640KB(reserved)    125696KB(data)  4216672KB(index_size)    9272KB(unused)

 Log Size with dbcc sqlperf(logspace) is 51.18 used 15.39

Thanks Shawn. Looks like I have a great job to convince my boss for $27000 x 4 (cpu) for SQL Server Enterprise.

Oops! forgot to mention. We are using windows 2k advanced, in a SAN environment with SQL Server standard edition.