Her PC sounds like a tablet PC. I am not sure how well Linux runs on those yet. Give it a shot
It is best to have Windows already installed if you're dual booting....so you should be OK with your current set up.
During setup of Linux you can specify NOT to install to Master Boot Record, then you must install to the superblock of the Linux partiton and boot to the OS via Floppy. I personally think you should just let it install to the MBR and Linux will give you a nice Bootloader to Choose Windows XP or Linux.
I think Libranet would be OK, but I don't know if it recognizes Windows during the install. It might. I can tell you for a fact that Redhat, Mandrake, and SuSE all are great and recognize Windows during the install.