Originally Posted by JaseVaughn
You have to make sure that your Disk has been converted to a Dynamic Disk to gain the option to shrink the volume it won't work on Basic Disks. Just right click on your HDD Disk Icon and choose to "Convert to Dynamic Disk" and it will take care of this process for you. Once that's done you can right click again and get the option to shrink the volume.
Ahhh, there's why it wasn't showing up. Good call, +1 to you and drumthrasher for the info.