have you tried using a file system other than ext2? try ReiserFS or ext3. Both are journalist file systems and restore good from fails.
Ok, if this doesn't help an you really need to have your MDK up and running as soon as possible, then use 5 partitions: 1 for root (/) 4/5Gb, 1 for Swap (size depends on your needs) as SECOND partition just after root partition, then one for /usr and other for /home, trying not to reach the bad sectors area, and then make the 5th partition as fat32 using the space left and mount it @ /mnt/fat (or the directory you'd like to name under /mnt)
It might sound like too much but, as a matter of fact, having the swap partition near the root helps in performance, and having /home and /usr in different partitions helps in fragmentation. That's the way i have my MDK 10.1 and it runs great.
Hope this helps