"as ext2 (or ext3?? how can I learn that??)."
ext2 and ext3 are very similar. The difference that ext3 is a journaling version of ext3. You can recover from crashes much faster using ext3 than ext2, although both are very reliable in recovering from crashes.
"You see currently the first partition on my primary drive was a 60 meg boot area. Should I create that and copy the previous content to the new one, just like the root directory? Or can I just create it and reinstall grub so that it does it on his own? Would there be any hardware problems if I do the latter?"
You should create that and copy the previous content to the new one. You should create all of the new partitions using Partition Magic and then format each partition using mkfs. The partitions do not all have to be the same file system type. You can make some ext2, some ext3, and some vfat. I don't think that mkfs will create the Windows XP file sytem type, whatever that is called.
Then boot the rescue disk and do the copies. Be sure to use the cp -p option or all of your files will belong to root.
"What about the boot sector?"
Once you get your new disk set up, boot it, set up grub the way that you want, and run grub-install. grub-install will overwrite your MBR with a boot loader pointing to grub.conf on your new disk. Then you can safely destroy the grub.conf on your old disk. Before you do this you might set up a boot floppy that boots your new disk just in case anything goes wrong when you switch the MBR to the new disk.
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Steve Stites