You may very well be able to resize your Windows partition using PartitionMagic. I've done it many times (usually for the same purpose as yours--to install a Linux distro), and I've never had a problem
Isn't partition resizing possible for partitions created/formatted with Partition Magic only?
Concerning 1 partition setup... ALWAYS use a separate partition for OS + Program Files ONLY, and the other one for user files. This way you can always reinstall if something happens, or restore backed up system from another drive. No user data losses.
Since you will have to reinstall XP:
Check the size of your Windows + Program Files directories and make that amount max. 49% of the C: partition. (For some reason, even if you assign another drive for pagefile and temp dir, Windows systems tend to decrease in speed if their partition is less than 50% empty. The more free space they have, the faster both disks and OSes perform).
D: Partition to be used for your user files.
Leave 2-4 Gb UNFORMATTED SPACE for Linux. I have assigned SuSe 4 Gb and it's more than enough, can do comfortably with less. Let Linux format it's system partition itself. If I remember well, SuSe needed cca. 600 MB for system and the rest it used for scratch (it made two partitions).
It will also install Boot Manager and usually Boot Managers will prefer Windows installed previously.
Since you would reinstall, a bit of advice:
Get another disk for speed. Install:
HDD 1 C: XP System + Program Files
HDD 1 Linux System Partition (you won't use these two simultaneously so you won't lose speed reading from both partitions simultaneously)
HDD 2: D: XP Pagefile, Temp (Virtual Memory and Environment Settings), Temporary Internet Files, Fonts (if used with a Font Manager like Adobe TypeManager and Suitcase which is reccomended anyway). 2 GB is enough, providing you have up to 512Mb RAM. Leave some free space here for fast disk access and refreshing. After you set it up thus, you'll notice substantial overall operating speed increase of your PC.
HDD 2: E: User files, My Documents etc. Leave place for APR Backup of the system. Make the backup after you install all you need, apply SP1, clean up unnecessary files and defragment. Or even better, get Norton Ghost for system partition ghosting.
Although you surely would like to avoid installation (who wouldn't?), now you have a chance to do it properly with a little extra work. In future, your system will be significantly faster and you'll be free to format and reinstall all you need without worrying about your documents and user stuff.
If you use some of Adobe's apps handling scratch files (Photoshop, Illustrator) set the Primary Scratch Disk to E, secondary D, leave the 3rd and 4th empty it will slow down apps).