I also think XP should be ok on the third partition. My xp is running on the second partition. (As long as you are using a primary partition). So you probably don't need to do anything (other than reinstall grub from a live CD after you are done).
But in any case, this is how you can do it...
1. format /dev/sda3 to ext4 (or ext3... whatever you are using)
2. mount /dev/sda3 on /mnt
3. copy files to new partition
4. edit fstab and update the / mount to the new partition with uuid or to /dev/sda3
sudo rsync -av --exclude=/mnt/* --exclude=/home/*/.gvfs --exclude=/media/*/* --exclude=/tmp/* --exclude=/proc/* --exclude=/sys/* / /mnt
5. chroot to /mnt, update-initramfs -u, update grub, install grub
gksu gedit /mnt/etc/fstab
Something like that. I have a script somewhere that does most of that and it hasn't failed me yet
for i in dev proc sys dev/pts; do sudo mount --bind /$i /mnt/$i; done
sudo chroot /mnt
dpkg-divert --local --rename --add /sbin/initctl
ln -s /bin/true /sbin/initctl
dpkg-divert --local --rename --remove /sbin/initctl
for i in dev/pts dev proc sys; do sudo umount /mnt/$i; done
Caveat - I believe the above is correct, but use at own risk. Backup beforehand. (Standard disclaimer)
Update-initramfs may not be necessary - but usually I change the swap partition when I run it so I need to do this to support hibernation. It won't hurt to run it anyway.