After resizing hda1 and creating hda2, hda3. I loaded linux on hda2, made flag boot. the resizing and loading of operating system on second partition went without error. I could load Windows. I then loaded Grub to MBR, it loaded without error. I then tried to boot hda2. It loaded without problem. I then rebooted and tried to load Windows, no Grub error, I then get Starting up: an it freezes up. Can anybody tell me what in Windows got corrupted and how I maybe able to fix it.
Thanks for any help!

Which Operating system you are able to load ??
windows or linux ???

If you install
1) windows first , linux second ....then GRUB manages the both os's
2) linux first, windows second ....then windows installation removes grub...

Use your linux cd/ dvd. Boot with that .

select -> repair installed system -> search for the bootloader and repair it.

What did you use to resize the windows partition, windows/ Linux?
Which windows OS are you using?
Which Linux OS are you using?
Most Linux distributions will automatically detect other OS's and put an entry in the menu.lst or grub.cfg file
What do you mean by "made boot flag", windows needs to be set active but Linux does not.

I am able to load Linux. I am using Windows XP

If I understand your situation correctly, you had xp on one large partition resized it and created two partitions, sda2 (Linux) and sda3 (swap??). You are now able to boot Linux on sda2 and not xp on sda1, correct?

Did you put an entry for xp in your /boot/grub/menu.lst file?
What distribution and version of Linux are you using? Methods differ and the last time I checked there were about 1,000 though only a few are commonly used.

You likely would get specific help if you posted the output of the fdisk -l command earlier suggested as well as the menu.lst file.

Do you mean you flagged hda2 bootable in the partition table? Or what do you mean?

It would be better to have hda1 flagged as bootable. Grub/Linux won't care which partition is bootable.

You finished installing Linux and then rebooted in Windows before you loaded Grub to the MBR? Before or after changing the boot flag in the partition table?

If I understand/believe you, that means the resize didn't harm Windows. But you are describing an unlikely series of actions.

If you hadn't claimed Windows worked after installing Linux and before loading Grub to the MBR, I would think something in Windows was messed up by the resize.

Maybe Windows is confused by its partition not being flagged bootable. The /boot/grub/menu.lst file could include a command to make Windows think its partition is flagged bootable even if it isn't. But it may be simpler to just use a partition editor to make hda1 really be flagged bootable.

If you didn't mess up the Windows partition, you must have something wrong in /boot/grub/menu.lst
Post the contents of that file.