Linux should be on its own partition. Some linux products can be run from with in windows. The linux forum will be able to point you in the right direction.
Before you start experimenting.. You should get a cd burner if you dont have one [or something for backing up data to removable disk] you should learn how to partition and format an HD with fdisk, you should learn how the delpart.exe tool works. You should learn about utilities like maxblast.exe.
You should feel comfortable with partitioning an HD and have the ability to install and remove linux should you choose to. An operating system is a little more difficult to remove than a program. You wont have an "add and remove" interface to uninstall it.
You can dualboot windows and linux, most current linux software comes with a boot manager. 98 on C:\ linux on D:\ and the linux boot manager gives you the option of which OS to load.
3rd party products like partition magic may be able to help. Linux has a utility for squeezing the win partition to make room for the linux partition. [i wasnt able to get this to work, suse linux said it had something to do with norton].
10gb is fine. 5 for win 5 for linux.
If you can back up your data to removable disk the best thing to do is start experimenting. If you only have the one PC.. keep in mind .. if you screw up and get get online you wont be able to easily locate information for correcting the problem.