O.K. Maybe this'll help. Without special utilities (like Partition Magic) you can't alter "the partition containing the installation files of the OS you are currently operating in" [read: "system partition"]. I.E. you can't format your C: drive if you installed Win98 to C:\windows and you are currently running Win98. (The same applies to any other OS.) Hence the need to either 1) Boot to a DOS/Win98 diskette with the necessary utilities, or 2) Run in another OS on a different partition and then fool with the partition.
Here's a few helpful tips for partition management (w/o using a 3rd party partitioning tool like Partition Magic):
*Win98 FDisk - Only creates/deletes FAT16 or FAT32 partitions. Cannot alter NTFS partitioins.
*Delpart (freeware DOS tool) - Can delete FAT16/FAT32/NTFS partitions.
*You can only create NTFS partitions during the NT/W2K installation process, or after it has been installed using the process described by cxg.
If you have Partition Magic, you can do just about anything you want. Word from the now wise: Create a PM recovery disk if you know what's good for you.
Hopefully this helps you...