You have 3 options when you install (watch for the 'options' button at the screen where you choose the drive to install)
1. Upgrade - installs Panther to upgrade your present OS X version to Panther, should not affect any files an folders, it just upgrades your present OS X - and usually is safe to simply upgrade.
2. Archive and install - Moves your system files and apps to a 'previous system' folder, installs Panther, and can import your old settings into your new install - the equivalent of a clean install, but sometimes the best option is:
3. Erase - your drive will be erased, anything that is not backed up will be gone forever.
(note) If you really want to change your partitions, or add more partitions, then you also will lose anything that is not backed up. (The partition process will erase EVERYTHING)
Before doing either 1 or 2, boot to the Panther Install CD
At the first screen, choose Disk Utility (from the Installer menu)
select your volume, and click on the Repair Disk button. when that completes, and some errors are found and repaired, Click repair again, until no errors are found. Then click on the Repair Permissions button. when that completes, then Quit the Disk Utility and continue on with the Panther Installer, choosing the option that suits your situation. Good Luck!