I have also had a problem with installing SUSE 10.0 with GRUB.
With previous versions of SUSE, Mandrake, and Debian I put the Linux Bootloader in /dev/hdb and it worked just fine. I booted into Linux using a boot floppy and used dd to copy the mbr of my second hard drive (/dev/hdb) to a file and then could boot that using XPs boot loader. With SUSE 10.0 that didn't work. When I tried to load the Linux boot loader into /dev/hdb SUSE wouldn't do it properly, and after the first CD installed and Linux rebooted the machine, Linux wouldn't boot, even after I copied /dev/hdb to a file while in XP and attempted to boot from it.
I had to run setup in advanced mode and make sure that the boot sector went to /dev/hda before things would work. (I still used dd to make a file, but I am just keeping it in case my boot sector gets corrupted so I can restore it.) I don't know why SUSE 10.0 seems to have a problem with the boot loader being anywhere but /dev/hda, but it wouldn't work for me putting it anywhere else.
My advice would be to partition the hard drive as you described above, but make sure the Boot Loader
location is selected to "Master Boot Record of /dev/hda" which is the first bullet in the boot loader section of setup. Please note that the Boot Loader
and the /boot Partition
aren't exactly the same thing. (e.g. you can put the /boot partition as /dev/hda2 when you do your disk partitioning as you described, but ensure that the boot loader is set to go to /dev/hda.)
Alternatively you could try the third bullet in the Boot Loader setup section, which is Floppy Disk /dev/fd0, as a temporary measure. Then you after you get XP booting from the hard drive and Linux booting from the floppy, you could dd your XP mbr to back it up to a file (See the LQ topic "Learn The DD Command Revised"), and move the Linux MBR to /dev/hda using YaST and see how it works. If it didn't work that way you could still boot off of the floppy and restore your XP boot sector to the mbr using dd. You could also copy the file to your XP boot drive and use the XP loader to boot SUSE.