I can't answer if you can install the OS twice , but I would believe MS would disable the first install when you had to register the second install ( If you could install it twice) .
You can can safely make a second partition on the same drive . I like Partition Magic . I have also used Digital Dolly
, which is freeware .
Why don't you just move your personal data to the new partition instead ? That way if you lost your OS , for whatever reason , your data should be safe . Except for possible HD crash or virus . Then you could chop away on your OS and if you made a mistake you could just do a clean install . A second install ( if you can do it ) would take almost a Gig of HD . I find it hard to believe you could recover that much space .
Just a thought