The install program will do the work of partitioning the second hard drive for you.
Linux has no problem installing the boot loader on a fat partition. (/dev/hda) There are two loaders you could use, lilo and grub. If you go with what the installer says, you will be fine. When you are done, there will be a multiboot menu when you start, and you can start up either windows or linux from there.
Be sure that you make a Windows ME rescue disk. It will allow you boot up and run 'fdisk /mbr' if for some reason you need restore the original windows MBR.
By the way, in linux the second hard drive is called /hdb for an IDE drive. The first partition is called /hdb1, the second regular partition is called /hda2. If you have an extended partition, it is /hdb4, even if you don't have other regular partiitons. The partitions contained in the extended partition start at /hdb5.