1.) I want to change the vista partition into FAT32 without losing any data, I'm assuming that's impossible? Alternatively, I can shrink the 298 volume into 188 GB of unallocated space, format it to an FAT32 extension partition, and move all my non-OS data from the NTFS into that. Would that be a better approach?
2.) The vista disk manager limits my shrink size to 1957 MB for whatever reason. (Diskpart.exe does this also)

The thing is, For the time being, I disabled the paging file, and I have no idea what a snapshot is. I understand that fragmented files can also be the cause of restricting shrink size, but defragmenting didn't solve it either. I'm out of ideas. Can anyone help?
I would dual boot but setting up a dual boot between Vista and XP is overly complicated. since my laptop's HDD is SATA, I would have to slipstream SATA drivers onto my XP CD and fiddle with all sorts of drivers and Bios settings that would just add to my frustration.