OK, lets try and fix that....
Pretty much the first thing I do when I buy a PC is blank the disk and re-install the OS.
I make a point of using a seperate partition for System and Data, because I want to be able to reinstall my OS and not lose all my data files.
So, what I did was... install Windows, but the Windows installer lets you set the size of the partition you want to create.
I then installed Linux, and used the partition manager in the Linux install to set up all the other partitions I wanted.
You can re-size the Windows partition for sure. I've done it with Partition Magic and I've done it with free Linux-based alternatives. A good example is Gparted, which can be downloaded as a LiveCD.
It's pretty user friendly...
You may be able to use the partition manager in the Linux install to re-size an existing partition, but you'll probably find Gparted a lot easier.
Or you could just make life really hard for yourself and use FDISK.
No, EXT2 is just the filesystem that Linux uses.
Windows 3.1 used FAT16.
Windows 95 used FAT32.
Windows NT / 2000 / XP (and I assume Vista?) uses NTFS.
EXT2 has long been the stardard filesystem for Linux systems, although there are other alternatives (e.g. ReiserFS).
EXT3 is new on the block, and offers EXT2 compatibility with journalling. That is each disk write gets logged and if you ever have a powercut the system can recover it's state.
Hope this helps?