If you’re starting afresh, the approach you take is really a matter of personal preference. I’ll offer my take, others will probably chime in.
A first decision is whether you still have use for the Dell utility partition. If you do, does it require Windows being installed for it to work? It may.
Even if you don’t want that utility partition any longer, there can be a reason for Windows installed on its own partition. There are some things you cannot do on Windows running inside a virtual machine. For example, you cannot directly access all the hardware (because in most vm’s you are going thru an emulation layer), so you would not be able to use certain diagnostic tools this way. And, certain applications are very demanding on RAM and disk, don’t work very well in a vm (unless on a big machine). On the other hand, you’re laptop drive is 60GB and these drives are typically expensive, so space may be precious. If you do decide to have a Windows partition, the smallest you can get away with for XP is probably ~8GB.
So in the above scenario, your first partition remains as it is and the second is re-formatted NTFS. This would be the only native Windows formatted partitions that you would need.
Your next partition can be swap, which depending on your decisions above, would be on the first, second, or third primary. The following partition can be for root (/), allow ~10GB. The remaining space can be allocated to /home. If swap is on the first partition, you will have used 3 primaries. If swap is on the second partition, 4 primaries. If swap is on the 3rd, the 4th primary will need to be an “extended” partition, with root and /home on 2 “logical” partitions inside the extended.
You don’t need any other partitions for Windows or for your virtual machine. VM’s typically are created inside a virtual disk, which will just be a file somewhere in /home. If you need additional or shared space between your Windows vm and Linux, both VMware and VirtualBox have a very nice “shared folder” capability which makes the filesystem transparent, i.e., you can use a folder inside /home for that purpose, even though its ext3. Same is true if using Windows File Sharing/Samba to share space, so again, probably no need for any additional NTFS or FAT partitions.
Any questions, please don’t hesitate to ask.