Finally, I am here to show you what *NOT* to do.
I made the silly mistake of misreading and thinking that the OS X partition had to start within the first 8GB, not be contained within the first 8Gb.....so here is what I did that *didn't* work.....
40GB IBM Deskstar (ATA):
3GB---->Mac OS 9
8GB----> OS X
2Gb---->Scratch
26GB--->My Stuff
Since have already spent way too much time moving files around, I guess I will just move OS 9 onto the 2nd partition and move OS X onto the first 3Gb partition
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Here is a what the apple TIL says......
Mac OS X 10.0: Disk Appears Dimmed (or "Grayed Out") in the Installer
On certain computers, Mac OS X cannot install on a volume that is not completely contained within the first 8 GB of an ATA hard disk.
A volume appears dimmed or "grayed out" in the Mac OS X 10.0 Installer. You cannot select it as the install destination.
Note: "Volume" in this instance refers to either an ATA hard disk or an ATA hard disk partition.
Products affected
* PowerBook G3 Series
* Power Macintosh G3 Desktop
* Power Macintosh G3 Mini Tower
* Power Macintosh G3 All-in-One
* Macintosh Server G3
* iMac 233 MHz ("Rev. A")
* iMac 233 MHz ("Rev. B")
* iMac 266 MHz ("Rev. C")
* iMac 333 MHz ("Rev. D")