Yes this is very possible. It sounds like what I did originally. The only problem you're going to run in to is this: If you originally installed windows on your 10 gig drive, then in order to put linux, you'll have to move all of your data to the 40 gig drive.
You have two (or more) options. You can temporarily unplug the 10 gig and install windows again on the new drive, then replug in again (the 10 gig would be secondary) and copy over the data you want to keep. That might be annoying. The other option, which is much more difficult, is to make a complete disk image of your 10 gig drive, then put that image on the 40 gig drive. I'm not sure what software you would use to do that, but you would have an exact replica of your original drive on your new drive. Then, you could safely repartition your old drive for linux.
From what I understand, there are third party softwares that will very nicely for keeping track of your booting up. Or, you could just use lilo. I'd actually reccomend sticking with lilo myself, because it's built in, and it's simple. You may have a problem with lilo if you install any partitions on the last 2 gigs of your 10 gig drive. Check out this website to read what I mean:
http://www.linuxgazette.com/issue38/veselosky.html
Finding a shareware program to make a disk image of that size may be hard to find. Whether or not you attempt a disk image, definately find all of your important data and back it up to CDs, tapes, Jaz, Zip, something. You don't know what could go wrong, especially when you're talking about moving operating systems around.
Try going to tucows at
http://www.tucows.com/ to find some disk imaging software. Hope this helps you out!
Tim