Wow...what a post man!
And what questions!
Let's reply to some of them, but, for starting, just a suggestion: don't try to do all in once, just a step by step if u have not ever tried Linux.
1,2,3,4,5) You MUST install Linux on a separate partition (to preserve your data), with a different filesystem than you are used to in Windows.
My suggestion is to shrink your actual D partition of about 8 GB (depends a lot on the distro and about how much packages are you going to install of it).
You can use Partition Magic to do such a task, but don't format the new space given from D, just leave it unformatted (in the installation process you will choose to format it in ext2/ext3/reiserfs/whatever-you-want).
However you can do all the partitioning tasks in the installation process (Mandriva, for example, has a great partitioning tool in the installation).
So you are going to shrink your 2nd partition to make space for at least 2 more partitions (/ and swap), it would be obviously better to create more partitions to distribute the fs hierarchy in a smarter way [ for example: / /boot /home /usr ], but to do such a thing you need an extended partition [the maximum number of primary partitions is infact only 4]).
Linux Kernel is provided with drivers to support Windows filesystems also, this means you can read and even write from/on your C NTFS and D FAT32 partitions from Linux.
Reading Linux partitions from Windows is not so comfortable though :S (I use explore2fs for little reading operations on my ext3 partitions [very slow]).
6) About the distro is a matter of taste: a lot of people will tell you different things about different distros.
However some of them are better for starting: a distro like Slackware is NOT absolutely the best choice for a beginner, but is maybe the best one if you want to know deeply the world of Linux.
7) Ahhhhhhhh sweeetttt questtiiooonnnnnn =P.
The answer is very simple: just delete the partition which Windows is installed on.
However, if u do that, watch out for the partition order (hda1 hda2 hda3 etc), in fact you are going to merge the deleted partition with an existent one not to waste hard disk space =D
8) To merge the deleted partition with an existent one you can use a lot of Linux tools.
I suggest parted with its user-friendly gparted gui =)
9) For a Linux newbie is not so simple to make work such a device; when I have a little time I'll try to search you a guide to install and connect with that device.
Just forget about Microsoft Outlook for this reasons:
1 -- You can run a lot of Windows programs under Windows with wine, but I think that's not worth.
2 -- There are a lot of Linux Open Source programs better than Windows ones: such as Sunbird (to replace Outlook for its calendar feature).
3 -- Microsoft Outlook sucks xD.
I hope that I've helped you