This is as good a time as any to say it:
Know what you're doing. Double check your selections. Most of the things you can do with this tool can erase what was on the disk. It's not easy to recover data you accidentally erase, and it can be impossible depending on what you do here.
The version of Disk Utility varies depending on what version of OSX it came with. Your options may be different, but the basics are the same.
To start: Select the disk you want to work on.
Erase the volume (might not be needed if it's new, but never hurts). To do this, choose "Erase" from the list of tabs in Disk Utility that is visible once you select a disk. If it's the boot disk you will notice everything is grayed out. Reboot with an OSX install disk, and use Disk Utility on the CD/DVD to work with the boot volume.
Just choose an option here in the Erase section. It doesn't matter what; the default "Mac OS Extended (Journaled)" is fine. Check the box at "Install Mac OS9 Drivers" unless you have a good reason not to.
This step removes old formatting and even though it's not strictly necessary, I'm going to suggest you do it anyway.
If the disk has been used before by someone else, or if you're preparing the disk for sale or disposal, check out the options to secure erase the disk, if available; what is there depends on what version of Disk Utility you have.
Give the partition a name. Although it's not strictly necessary, as OSX takes care of these things with some VooDoo, you should know that in UNIX volume names should be one word. In general, avoid spaces in your disk name unless you have a very good reason for them. Chances are you don't, because I can't think of any.
Like I said, OSX will allow you to use spaces in the volume name, and with the vast majority of users nothing bad will happen if you do. Since this is your data, I'll let you decide whether you are OK with "vast majority of users" or "let's eliminate the possibility, however rare".
So, either "Macintosh HD" or "MacintoshHD", by way of example.
Also, again it's not a problem at this time, as OSX handles this well, but avoid a name that might be a problem due to it's case only. UNIX Is case-sensitive and case-preserving. OSX is case-insensitive but case-preserving, and Windows ignores case altoghether. I suggest that you pick a name that will be unique no matter whether it's uppercase or lowercase; ie don't name it "SYSTEM" if there's an important file on your computer named "System" (which there is).
So, "macintoshhd" is fine, "MACINTOSHHD" is fine, and even "MacintoshHD" is fine. But "System" or "Applications" or "Developer" is probably not such a good idea.
Again, not supposed to matter. Again, decide how much you like to take chances. These things tend to cause problems only if you move from one OS to another, which you are planning to do. Some OS's may not know the difference, and do something to the wrong file if you have two directories that only differ in case. It won't be a problem if you only use the disk with OSX, but who knows what you might be doing a year from now? I say play it safe.
Once you have a new, erased volume, move on to the "Partition" section (beside the "Erase" tab).
At "Volume Scheme", choose the number of partitions you want. I'm going to assume from your post you want two; as an example. So, pick "2 Partitions" from the list.
At this point a nice graphic shows up with a bar separating the two partitions. You can move the bar with the mouse to change the relative sizes of the partitions, and you can also enter specific sizes in the text box. You decide; very small partition sizes will require entering text. You will enter the text for the first partition size; the second one falls where it may from what space is left depending on the size of the drive.
Name it, taking advantage of the practice you already had with the "Erase" routine I made you go through when deciding what to name it. I'm assuming it's a Mac bootable partition; adjust instructions as required if not.
Choose "Mac OS Extended (Journaled)". MacOS Extended is the required partition scheme, and it's a pretty good one so no need to play with that. Journaling can be turned off or on at any time, but since we like Journalling on because it increases the safety of your data, let's start with it on.
Do not choose MacOS Extended (Case-sensitive ... ) unless you are eager to learn about the problems I alluded to earlier. There are many Mac applications and files that haven't paid any attention to this before, and it's just not a good idea to make your system case sensitive unless you know a very good reason, in which case you wouldn't be asking about this stuff in the first place.
But, just so you know, if you do enable this, then as an example you could create two folders named "System" and "SYSTEM"; they will be two completely different directories on your computer; they will be able to reside side-by-side in the same folder. Up until now, OSX would refuse to let you do that, insisting one be renamed. With 10.4x this new option shows up in disk utility to allow a case sensitive file system.
Now, there will be no problem with that for your computer; but they are both the same file name on a bunch of other people's computers (including any Mac without this enabled), and having two directories with the same file name is guaranteed to make some other OS's act crazy in one way or another. Chances are, not in a good or even bootable way. Probably not a good thing, if you are looking to share files with Windows. You will have enough file naming problems.
"Install OS9 drivers" (checkbox) is a good idea if you need to recover data from the disk for some reason (like your Mac suffered some horrible accident). Some may see this as a security risk, and leave it off. Since there are other ways to insure security, it doesn't bother me to have it enabled. You decide.
Then click in the diagram so that the second volume is highlighted in grey (it would be called "Untitled 2" before you rename it). Go through the options as you did with the first: for use with Windows, or any other foreign OS like Linux, you want to choose "Free Space". Don't ask why. But, do give it a name, etc.
Once you are happy with the settings, go ahead an format the drive by clicking the "Partition" button.
Once you partition the drive, you can now go to the Erase tab again. In the left hand window, you will notice you have the disk itself (might say something like "198.9 GB ATA Seagate') and below it, the two volumes we created with the formatting. Select the second one that we created as Free Space; and choose the "MS-DOS File System" as the Volume Format. The Mac OS9 drivers option will go away, as it should. Name it as before, and hit the Erase button.
You're done.