I'm not sure what the case was with XP, but some OEM versions of the Windows Vista and 7 installers behave this way. OTOH, my retail (upgrade) copy of XP does
not have
any of those restrictions. I've re-installed it several times, and it's never insisted on taking over the entire hard disk. There may have been an
option to do so (I don't remember that detail), but I'm quite certain I've installed it alongside other OSes without running into problems.
That said, what every Microsoft install I've ever made on a BIOS-based computer has done is to wipe the boot loader code from the MBR. This can be an annoyance if you had GRUB or some other multi-OS boot loader set up there, since it renders your non-Microsoft OSes unbootable until you re-install your original boot loader. It doesn't destroy those installations, though.
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I've read this many times, too. I must be doing something wrong, since I've installed Windows on other partitions many times.

In fact, I've installed different versions of Windows side-by-side on the same computer and disk (although I don't happen to have such an installation right this moment).
What Windows
does require (on an MBR disk) is a primary partition. Normally this will be the main OS installation partition, but it's possible to install most of Windows in a logical partition and use a primary just for a few critical files. I've never tried to set it up this way, though, and I don't recall what sort of hoops you've got to jump through to do it.
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