Windows disk manager by itself is not able to resize partitions, only create and delete ones which is a real problem seeing as though most of the hard drives are by default created with only one primary partition ...
Partition Magic is good but your not likely to be using it everyday, purchasing a product of that expense is out of the question for most people, i would recommend the free version of Partition Magic, QTparted, which is found almost on every Linux live CD, such as Knoppix ... QTparted enables you to create, delete and resize your partitions, which is basically all you need
As for backing up your hard drive, you can use a backup manager which is included in Windows XP, might not be the most advanced program but it does the job ... most people also don't back up their whole hard drive, only the necessary files in destinations such as My Documents and so forth ... if you do need to back up everything on your computer, you can use a slave drive for that
Good luck
