angeloklok, I think you are confused. "Unallocated" means that the storage space cannot be used, so you want to minimize the amount of unallocated space.
(Simplification follows)
Let's say you start off with a brand new 1 TB drive. The whole drive is unallocated. You want to divide it in half, so you partition it into two equal parts.
http://en.wikipedia.org/wiki/Disk_partitioning
All of the storage space is still unallocated. So you designate the first half of the drive as the primary partition and format it. Now half of the space is allocated (and, after formatting, useable) to the primary partition. The second half is still unallocated and therefore unusable.
What to do with the 37 GB? You can either turn it into a small partition or you can back up any data on it and start over by partitioning the drive how you want. You can treat it as one single large drive or you can partition it into several smaller logical drives.