I used DOS FDISK to partition 2/3 of the drive as a primary DOS partition and the other 1/3 as an extended DOS partition and formated both of them (C & D). I also executed the DOS SYS command in both of them. Then second guessing myself I began to wonder if I should not have SYSed D:. Since the drive is virtually empty, now is the time to start over again if I need too. My plan is to use C: for DOS and Windows 3.1 applications and D: for Linux applications. The HD by the way is 1 gigabyte. I think the core of my question is, does it make any difference how the D: drive is partitioned?

Just nuke the extended partition alltogether. If you're new to Linux, get Mandrake, it'll let you do the partitioning safely, without touching your Windoze partition. It'll even hook you up with a bootloader (that will let you choose between booting into Windoze and Linux).