I installed (a long time ago) Mandrake 6.5 on a computer that had Windows 98 already on it. I did not have a recovery CD for my computer, so I didn't want to format or use FDISK.
Even back then, Mandrake included a version of Partition Magic so I was able to resize my Windows 98 partition and I didn't lose any data.
I now have Mandrake 9.2 (same computer), and although I used my existing partition, I assume it still has excellent partitioning software included.
First, run a thorough defrag on the XP system before you resize the partition, so nothing gets corrupted. (You should do this the night before).
HTH, and by the way, Mandrake is an excellent distro IMO.