The `Unallocated` space is an unformatted partition of the drive. You need to go into `Disk Management` and Format it to make it usable. Right click the space and follow the Wizard.
This will give you a separately identified partition. If you wish to merge it with `C` you either need to delete `C` as a partition (not recommended as it will require a full installation of everything on it again) or use proprietary software like Partition Magic click here to achieve the task.