Thanks for your help once again.
I just messed with everything a bit and it worked.
I now have a swap partition and a disk image.
The problem is that I cannot boot it up.
I am not getting a lilo screen like I got at my old computer.
So I searched w google and found that I needed to make changes to etc/lilo.conf
I did this and I changed all hda to hdb6 ( this is the partition where I installed linux ).
The problem is since I cant load the disk image it saves nothing.

Could you give me ( now that I know how to create a disk image ) the right way to set this up?
The lilo screen I mean ? how to boot it up?
Cuz since it worked so fine the previous time without doing anything special, I am getting frustrated