i would have just pop in the live CD, and use the installer to shrink the space for linux. i shrink or create the partitions inside windows, i let the installer do it, like in ubuntu, it has a slider that you allocate for how much space you want to give for linux, then it creates the needed partition and installs. its that simple!
can you create a screen shot of your disk management to see what u created. right click on computer and choose manage and then click on the disk management on the left.