Yes, you can do that.
In terms of custom partitioning, Mandrake is very nice. SuSE is my distro, but is not as forgiving in the partitioning department.
What you want to do is format that Maxtor as a FAT32 drive in Windoze XPee. Then when given install options in mandrake, select custom partitioning. Leave the NTFS partition untouched. Break up hdb into at least 4 partitions,... a root or / partition, a swap partition that is about 2x the size of your RAM (plus a bit extra), a /home partition (for your user accounts) and a FAT32 partition for transfering Linux stuff to Windoze (and vice vera).
/ - root partition - 15 GB
swap - swap partition - 1 GB
/home - home partition - 34 GB (nice and big for win programs using wine/wineX/Cedega, and multimedia)
/mnt/transfer - FAT32 partition 30 GB - for moving big stuff around
Mandrake will install a new bootloader called either Lilo or Grub (Lilo is more configurable). You can go with Mandrake community (3 CDs, so a lot of downloading), or find the Pro version in a retail outlet like BestBuy or something (if in the US, if in Europe it may be easier to find).
Mandrake community can be found here: