The safest thing to do is to use a Windows based partition program such as Ranish or Partition Magic. It will safely shrink the FAT32 or NTFS partitions and protect the data. After this, ether have the same program format the new partition with linux or just leave it as free space and allow fedora to partition it. I would probably let Fedora install the boot loader on the MBR then change lilo to allow Windows to be default (keeps your parents happy).
Better yet, let them give you the old computer and go buy a $40 router. Then you can have a linux box and let them have their Winblows box.