As far as I'd aware, even SATA 1 doesn't have a maximum disk size, only a max data throughput.
I suppose it's possible that the specific controller might have some arbitrary limit, but I doubt it.
at a guess I'd say it was just the largest capacity available (at least from hp) when the manual was written.
I've put 1TB drives in a similar age Dell optiplex 380 without any issues before so I'd be surprised if it was a problem.
I just had a look at the spec and the largest disk that HP sold for the PC was a 500GB. So that's just their limit. You should be able to fit any capacity drive.
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