Sure you can use partition magic but I wouldn't recommend it. It seems to have made a mess of alot of hard drives lately. The latest Knoppix cd's have a better program called qtparted that does a much better job.

The rule of thumb is: make dos partitions with dos applications and Linux partitions with Linux applications.

Linux can be installed on ext2, ext3, reiser or xfs file systems. My personal recommendations are either ext3 or reiser as they are journaled file systems. In the event that your machine is shut down improperly you have a greater chance of recovering data with a journaled file system. xfs is fine too but you really won't realize any performance gains unless you're building a cluster or somesuch.