is it possible to resize partitions under win XP using Disk management tools, or I need special software for that? I know there are couple of software tools such as Partition Magic. However, I'd like to know if this is possible to be done in Win XP itself.

dont try it in windows. The tools in windows tend to be very pmitive and will probably result in loss of data if not worse.
there are a lot of better tools out on the internet and a search through Google on disk partitioning etc will give much better advice; partition magic is one that is well known and ther are a nupber of free downloads as well.
best of luck

partition magic is what you should use i am sure there probably is a program but still just use partition magic back up your hard drive to an iso image before you clear your hard drive or make any adjustments

the way in xp is to partition before you install your operating system. but im guessing you already installed so that wont help you much. beyond doing the setup of drives before you install xp i dont know if there is another way to do it.

The best way that I have done it, is by using Partition Magic. I even helped my friend do it. There is more programs that you can use, but since I find Partition Magic easy (sort of) to use, it might be the best choice to make.

Or for free, dl Gparted Livecd, burn it tp a cd and boot from it. If you want instructions they are in the help file, and also on the web with pictures.
Easy as. Okay, the ui is basic, but everything you need is there and it is straightforward.

Thank you all for your replies. I wll use third party software, of course. I know that one way to repartition drive is when fresh copy of Windows is installed. However I wan't sure if that is possible after windows is installed (to move part of free space from one partition to other).I thought there is some option in Admin. Tools ->Computer Management, but now I know there is none.
Thank you