Yes it can.
2.4.x and 2.6.x kernels can read (works great and is perfectly safe) and write (still a bit experimental) to NTFS filesystems, however you may have to compile the NTFS module by hand since some distributions do not provide it.
You will need to either create an ext3 partition (backup all your data and resize your NTFS partition with Partition Magic or FIPS to make room for ext3 or backup everything, delete and repartition from scratch) on your existing HDD or add a 2nd HDD.
It is a lot easier to just add a 2nd HDD ($40 - $100 on newegg).
Grub can handle booting from multiple drives without any problems and can also allow you to dual or triple boot (Linux + XP or Linux + BSD + XP or any combination of operating systems thereof).
Message me if you have any other questions
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You can run:
locate ntfs # to see if you have the ntfs driver
# or
find / -iname "*ntfs*"
# normally your modules are in /lib/modules/$your_kernel_version/kernel/fs
# you can run uname -a to find out what kernel you are running
# on FC3 for example it would be in /lib/modules/2.6.12-1.1372_FC3/kernel/fs
# FC3 does not provide the ntfs driver by default, kubuntu might - if not I think you can aptget it or something like that
# if you run
mount /dev/hd?? /mnt
# or
mount /dev/sd?? /mnt
# the kernel should autoload the ntfs kernel module if it is available
# you can run:
lsmod # to see what kernel modules are loaded
# you can also:
lsmod | grep -i ntfs
# or
lsmod |less
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