I have resized a single hard drive (250GB) using Vista's drive shrinking/expanding tool to make two partitions. Then formatted the new partition NTFS (the only option availible). My intention was to install Fedora 7 on the new partition. However, during the install process Fedora install only sees one partition (250GB). Vista sees both partitions. The only option I see in the Fedora installer is to format the entire drive. Am I missing something? How do I get Fedora to recognize the new partition?

What's the output of fdisk -l?

You might have been better off just making one partition for vista, and leaving the remainder of the drive as free space for Fedora to detect, partition, and format.

Apparently Fedora doesn't recognize the partition type for vista (or the partition table used by vista) and just sees the whole disk as one partition.

Try a liveCD. Does it see two vista partitions, or just one? That could tell you whether it's a Fedora problem in particular, or a Linux problem in general (in re vista partition type and partition table).

Even if you start from a completely empty hard drive, you should still be able to use custom partitioning. I haven' tried Fedora 7 yet but I would be surprised if it broke with that tradition.