You may have to create a driver floppy or with some boards wait until the third screen after selecting the install not repair option for the recovery console to press the S key for special devices depending on board. The last build here saw an nForce chipset requiring a driver floppy there for XP to copy and load drivers from when going to install Windows.
A friend ran into problems on a board with a VIA chipset where a driver floppy wouldn't work?! That was until deciding to try the press S option seen later on the screen after pressing the enter key for seeing Windows installed and selecting the closest chipset to what the board had from a list suddenly saw XP detecting the drive and all went on well from that point.
With the current AM2 model here no driver disk is needed while the 939 board in the last did. The newer boards have seen some improvement with the onboard controllers there.
Once you have the driver disk made up simply press F6 at the first screen and browse to the floppy unless burned on cd for a second optical drive and see if the installer readily copies and loads them up right away for you.
Meanwhile the partitioning theme there should work well. If the 120gb primary does get a little full at some point you can always use GParted to shrink the second partition somewhat in order to expand the primary to where you need it.