to BC kazily
I'm not sure I understand your questions but I'll try to answer them, just post back if I don't cover what you wanted to know.
Firstly - do nothing to your original drive until everything is sorted out with the new drive. Do your drives have volume labels (names) so you can be very sure which drive you are looking at? (Not just the drive letter because that changes depending on how you boot the system.) E.g. you could label the two partitions on your new drive 80GIGA and 80GIGB or something else informative.
The two partitions are a good idea (recommended by many) but usually that is done in the case of a new installation where the first partition only contains essential Windows components and all user files, caches, temporary storage, etc is put on the second partition. At the moment you have your whole system on the first partition - you should think about relocating your user folders to the second partition to give Windows a bit more room. Why did you make the first partition FAT32 and the second NTFS by the way?
I ASSume I now have 2 win XP's and 2 copies of everything else that is on the old drive?
You would have a copy of everything on the new 20GB partition but whether you have a second copy on the 60GB partition depends on how you did things. When you boot windows that partition should be your D: drive, open up Windows Explorer (or use My Computer) and look at what's on that drive. If it's got files and folders there then you do have another copy of your system. I'd suggest there is very little benefit in having another copy [i]on the same drive[/b] copies are for disaster recovery e.g. after the drive fails. If your 80GB drive fails then you loose both copies of your system anyway. I'd suggest you use Windows to format it so you have a clean partition to use.
the old drive has 13 GB used 5 GB free. After copying...the "new" C drive has 17 GB used space 1.7 free so is that because it copied the free space?
I'm not familiar with the WD Lifetools you used but any free space you copied would still be free space on the new drive so that's not the answer. I'd like to know what functions you used in the Lifetools to know what's going on. Are you currently booting from the new 20GB partition? If you are not certain open your computer, remove the power cable from your old drive and reboot.
The 2nd partition is G I think...
What optical drives (CD/DVD) do you have? Look in windows Disk Manager for the facts about what partitions are where and what they are called. Go to Control Panel>'Administrative Tools'>'Computer Management'>'Disk Management'. If you can post a screenshot of that it will help myself and others to understand your situation better. See this tutorial - How to take a Screenshot
If I reformat the old HD...I still would have XP on the new drive?
Yes but don't reformat the old drive until you are certain everything is as you want it on the new drive. If the system were mine I'd be looking to use the old drive as a monthly or weekly backup of your data. Others may have better suggestions.