my current hard disk setup is:

primary drive - 160gb (37gb free - although I can free up more if needed)
secondary drive - 200gb (138gb free)

There are no partitions on either!

I'm about to install Slackware 10.1 and want to run xp as well as slackware. I hope to use Lilo (?) to select between the two on startup.

So can someone tell me what an ideal sceanrio would be in terms of partition sizes - i've got partition manager up and want to create the partitions on my exisiting windows installation before doing the installs. I understand that i'll also need a swap partition? How large should that be? and finally should I reinstall XP first, as it'll probably erase the MBR if installed later?...

apologies for my confused approach to the whole matter - please help make matters clearer for me

Well there must be partitions at least one or you couldn't have a filesystem on it :P
Partition sizes.. I dunno, it's up to you, but generally on your first install it will be better to use only one partition for Slackware (any size you want) and of course a swap partition no bigger than 1gb. Leave the rest for FAT32 partitions to be able to use the same files in linux and windows.
Once you get used to Slackware and Linux you'll know how to organize your files in different partitions.
You can install XP later, the MBR (where Lilo will be) will get erased but you can write it back by booting with Slackware cds.