I also recommend you Power Quests Partition Magic
I have used it successfully
Install it on your C drive the interface is self explanatory
or try its help guide its flash based it will tell you exactly how to go about and after you do all the setting on the software and the moment you click on apply it will start its work the system will be rebooted and the partition resizing will be done in dos mode itself
(This is how it happened in Win98 i don't know about XP but i think so that it will happen properly) leave the rest to the software.
It will surely solve your problem