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#11
Your plan is fine, and you can indeed use Partition Wizard bootable CD if in the second shrink operation Disk Mgmt will not shrink C: enough. Always back up your files any time you use a 3rd party DIsk Manager.
However you might also need to use the best tool which will move System files if they are blocking shrinkage: Perfect Disk 11's trial version Offline/Boot time defragger for System files.
After downloading PD, set Defrag drop-down menu to Consolidate Files. When this completes, attempt shrinking again. If that is not enough, then rightclick C: drive and do Offline or Boot time defrag selecting "System" files.