Actually, you don't have to remove the FAT until you're running the Linux install. It asks you where you want to install to, you point to you E partition, create two partitions (as Rick said), and let it continue with the install... it's actually fairly painless.
If you want extra security, you can buy a program called System Commander Deluxe from V-Comm. It has an OS Wizard that helps you 'safely' install new OS's... it's not 'too' expensive, either... Using it, I've had Win95, Win98, WinNT4.0, and RH Linux all installed and functioning on my meager 4.3GB...! And they all worked! []/w3timages/icons/wink.gif[/]
Matt