You're right - although lots of people say 'Ubuntu's so perfect' - sounding a bit like Windows and Mac fanboys - it has issues.
I'm sooo happy with my system now, I'd recommend the same setup to everyone (and a few people who tried it agree with me now).
Right - so you need to know bout hard drive capacity and how to lay things out, I don't know your setup unless you update your answer. I will just guess that you have maybe 120GB and work from that.
How about a backup of your drivers, and think about doing a fresh XP install. Okay, you're right - installing XP is a nightmare to be avoided if possible. Ok, then uninstall the big stuff from XP - use ccleaner, and then take off ALL of your personal stuff - music/pictures - you could use a separate storage partition for this.
Right, now I think 50GB is more than enough space for XP - take care not to go much over 75% full with games installed and defragment it a few times until it's fast. Now you have around 70GB Free, and we'll make a decent size root partition - now I download tons of stuff for Ubuntu, Root doesn't grow much - now I'm stuck with a rather big partition, and it's only got 7.5GB on it - so to be ultra safe, you could give that 9GB. Next a swap partition - for 2GB RAM give it a bit more - 2.5GB - if you want to hibernate.
I'd fully recommend ext4 - I think it's safe enough for general use, but if you're worried, just use ext4 for non storage partitions (/root but then maybe ext3 for /home).
/home can take up the rest of the space.
I'd recommend you make these partitions by installing the system - and then move files from your storage NTFS partition onto your /home partition. It's safer there.
After installing Ubuntu onto XP, when you reboot, you should see a menu with Ubuntu and XP listed. It's that easy...
Now disable everything you can in XP (as long as ubuntu runs and works right) - including themes, wireless/intenet, even background and all the performance effects - set to max performance. Disable all the startup rubbish.
You'll find games run smoother. You'll also find that ALT-TAB switching to desktop from games will work more smoothly (for stopping the game and maybe enable internet to browse an answer to a question you have about the game...).
Actually, it might be wise to keep a more normal XP installation until you have used Ubuntu for a month or five, before totally stripping it down.
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DO NOT TOUCH AUTOMATIX
but DO get 'Ubuntu Tweak' - it's really good.
For anything else, and there is a whole lot more (maybe twenty pages if I answer off the top of my head...)
Basically, just install XP, then install Ubuntu, and have fun!!! After a year, I swear you won't need to touch XP for anything except for gaming (maybe less, maybe 6 months)