I have a massive 160GB external hardrive which is on FAT32 file system. It has few backup images of my Linux PC. What I want is I want to partition the hard drive into two with 80GB FAT32 and 80GB EXT3FS. How to do that in linux without losing those backup images which are in it.

I have tried through CFDISK but couldnt work out how to partition it properly without damaging it. Because I couldnt find the 'free space' to slice it since the whole drive is on FAT32. I know I could do it through Windows but I want to know the right procedure in Linux.

Any suggestions will be appreciated.

gparted - will be available as an application under dapper, but I'd suggest the liveCD.
Much safer.

You need to resize the partition, and various commercial partitioning programs for Windows can do this. (E.g. Partition Magic) I don't know about such programs for Linux. But if you intend to have Windows on that machine, I will suggest you download and install the free VMware Server from vmware.com. Then you can install various linuxes in virtual machines, and no partitioning is needed - all those Linux "partitions" are actually just files on the fat32 partition and thus easy to back up. Windows will also let the linuxes use its device drivers.

back up your files, defrag the disk under windows and use a live cd with qtparted on it and resize.