I have a 140gb hard drive
The hard drive is currently partitioned into two 70gb partitions (how I received it :: laptop)
I want to partition the first partition into two 35gb partitions (i.e. 35gb | 35gb | 70gb)

Administrative Tools -> Computer Management
Storage -> Disk Management

My initial attempt at shrinking the first 70gb partition to 35gb, the corresponding Shrink dialog allowed me to shrink to a max of ~31gb. I wanted 35gb. I backed up 12gb of files onto the 2nd 70gb partition thinking that more space would allow for a larger shrink. Attempting to shrink afterwards, 29gb was max. I deleted temp files and even the hibernate file, and 28gb was the new max. Making more space didn't work, so I thought maybe if I fill the drive with data, I would get the result I was looking for (yeah right). I restored some of the 12gb of backup data and attempted a reShrink. Now 27gb is max. I'm confused, but I have an idea as to why I'm experiencing these issues. I'm just not sure what it is called in Vista. Like other users, I've defragmented. Still no success.

I've searched this forum before posting, and the other relevant threads regarding this issue weren't of any assistance. None of them were solved actually. Maybe I missed something?

The single hard drive in my laptop is Basic (not Dynamic)
The first partition is 70.77GB.
52.6GB are free.

That should be plenty of space to create a 35gb partition (by Shrinking)

Any ideas?

No success with this issue even on the official ms forums

Where is your Vista installation?
Would it be possible to remove (temporarily,) all the files on the partition and then "delete" the volume and remake the two partitions of your choice?
Be a little cautious.Laptops, as you may know, often have a hidden partition/directory, holding all the original installation. (I believe you can press ALT F10 on start up or similar, to recover your laptop. That may be what is causing your problem.

Where is your Vista installation?
Would it be possible to remove (temporarily,) all the files on the partition and then "delete" the volume and remake the two partitions of your choice?
Be a little cautious.Laptops, as you may know, often have a hidden partition/directory, holding all the original installation. (I believe you can press ALT F10 on start up or similar, to recover your laptop. That may be what is causing your problem.

My Vista installation is on the first partition of the only hard drive in the laptop. In windows it is referenced/configured as "c:\." I did push alt+f10 during the boot sequence, and was prompted with a system restore.

I may just format the drive entirely and install xp/gentoo otherwise.

Vista won't allow you to "shrink" a partition over an area that contains data - so after removing all that stuff you'll have to defragment your hard drive. Depending on the tool that you use, you should be able to move most of the stuff to the beginning of the hard drive - BUT, if system files are stored further out on the drive, you most likely won't be able to move them.

If it's your pagefile that's causing the issue - then set the system to run with no pagefile, reboot and recreate the pagefile (after removing everything else) and this "may" move it closer to the rest of the data.

Please be aware that the requirements for Vista specify that you have a 40 gB hard drive - so this may impact your Vista installation significantly

I'd suggest a good defragmentation utility that will let you know what is where on your disk. I have used VoptXP to locate the files on different parts of the hard disk. I presume that their Vista compatible version will have this ability also - and I think that they have a free trial at their website: http://www.goldenbow.com/

At least one program that will allow you to "shrink" an active, data filled partiton is:

Acronis' Disk Director Suite 10.

The latest build is Vista capable.