what is the deal with 'PhatLinux'??
 

i just passed by this.. what is the story with this distro (if its even considered one).. it runs on a windows partition??

what are you confused about? yeah it can install in to a file on a fat32 partition, just like mandrake, peanut an some otehrs can do... nothing unusual...

maybe i am confused from what i read on their site..

it doesnt run IN windows right?? can it share a partition with windows or does it have to be the only os in that partition..

No, it doesn't run in Windows, it simply stores its file on the Windows partition (sort of). It creates a huge file on the vfat partition and formats that file as ext2. Then when you select to run it, it uses the ol' loadlin program (or a version of it) to close down Windows and boot Linux from within the ext2-formatted file held on the vfat partition. If you've looked at SuSE's Live Eval version of their distros, you'll have an idea as to how it works.