You can always install it on the same drive but I assuming that you don't have spare room on the drive and don't want to repartition the windows / linux os.
You can do it on seperate drives but you might have to swap ide or sata cables to get the desired is to boot unless somone has a trick to doing this using the spare ide 2 as primary boot but then you are w/o dev/cdrom
Yes. I run Windows on my primary HD and Linux on my Slave with no problems. Lilo/Grub (linux bootloaders) will handle this for you. I prefer Grub because it is more "fail safe", but it is a little more complicated to setup. Lilo is easier, but if you mess of you config, you have to boot off of a cd to get back in to fix it.
There is a way for the boot.ini in Windows to handle it (from what I have heard), but I don't have a clue about that route.