You can read from ext2 filesystems within windows by using this tool -
*uranus.it.swin.edu.au/~jn/linux/explore2fs.htm
And also ... if you are low on disk space, you can install linux on a small partition (500MB-1GB will fit a lot) but go for a lighter distro like slackware.
If you want to install linux on a FAT32 drive go for Zipslack, a variant of slackware