Ive set up a partitioning scheme that consists of

/ = 4gigs
/boot = 32mb
/var = 8gigs
/home = 8gigs
swap = 768mb
/usr = whatever space it left

I am going to make my /, /boot, and swap primary partitions, and the rest logical partitions, however to use a logical partition you need to have an extended partition, and extended partition doesnt house the files, just points to the logical which does hold the files.

So, my question is Why is it asking me to allocate space for the extended partition that doesnt hold the files, and how much space should I allocate for it?

You should just be able to create the logical partition and it'll automatically generate the extended partitions, I believe.

Also, your /boot seems a tad small if you want to store backup kernels and so forth.

Its vice versa, the extended automatically creates the logical, but what I am asking is how much space do I need to use for the extended, will files be stored on the extended partition?

If you make an extended partition, and you already have the 3 primary partitions, then just put all the space that you got left, in it. Because in order to make the logical partitions you need the space in the extended partition. if I used you scheme and you got a 40 gig hard drive, Then make hda1 4gig, hda2 32MB, hda3 768 MB, hda4(the extended partition) 27,... gig, hda5(first logical) 8 gig, hda6 8 gig, hda7 10,... gig.

Alright, thanks, that clarifies things