You have D if you want to install another OS in Dual Boot.
You can make any subsequent data partitions Logical using 3rd party manager like free Partition Wizard bootable CD which is the preferred tool for Windows 7.
I would do the shrink with Disk Mgmt however as it is failsafe.
Make your Recovery disk set as the Recov partition can become inoperable with repartitioning or new OS install. Then you have the option to recover it's space into another partition or create a new one there. If you don't want the factory utilties then you can also delete the other utility partitions.
It appears your System MBR is on C as it should be, however during repartitioning if you lose the ability to boot Windows 7, you'll need to correctly mark it Active, then repair the MBR by running Startup Repair up to 3 separate times from booted Windows 7 DVD/CD.
All of this is covered in Option One of this great new tutorial: Partition Wizard : Use the Bootable CD