Yes, thats a very good idea i go the same. What i did to be safe is copy all the disk, every file onto the partition and it does speed up installation. i have never installed under a partition and i hope i never have to because that would mean my Windows had a problem but it must be faster!
You have to remember a few things when you want to install off the partition you must change your 1st Boot to that partition. Then if you reinstall Windows XP don't format the partition with the Disk on not too sure if you can but its safe not to try.
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