Here is what my current setup is in the context of partitions:

sda1 = NTFS (WinXP) ~15GB
sda2 = ext3 (Zenwalk 5.2) ~25GB
sda3 = swap (linux swap) ~512MB

I want to split sda2 and create another ext3 partition [sda4] to install slackware 12.1 but I want to retain Zenwalk 5.2 on sda2.

Now, using WinXP one would use disk defrag then continue to partition sda1 safely.

Do I have to defrag sda2 before I partition it?
If so, how is this done safely so there is no data loss on sda2?
If not, is it safe to partition sda2 without any data loss on sda2?

Thank you in advance.

You need to shrink the filesystem, then the partition. No need to defrag.
Easiest done with the gparted liveCD - it's a GUI like PartitionMagic.

Small, and very good.

I will be using gparted using the Zenwalk 5.2 Live CD to partition my harddrive - however if I shrink the filesystem then create the new partition from storage gained, will the data on sda2 be retained without loss?

I have used GParted to shrink various kinds of partition with no data loss, but I would still never attempt it without first backing up any important data.

Also, you can use something like "df" to see how full a partition is, so you know how much you can shrink it. (Don't push it--ie leave some extra room. I don't know what happens if you try to shrink a partition to a size smaller than the contained data.)

I have used gparted many times, including the live cd, and never had an issue that I recall.

Note: remember to edit your Zenwalk fstab for the new swap partition location.