Thanks mike3 for the comment.

I did as you suggested and it worked like a breeze on my macbook. on a machine already setup with MacOSX (10.5 - Leopard) - a> setup windows using bootcamp b> after windows setup completes resize mac partition using diskutil after that.

It is much simpler than modifying using command lines. I have 3 partitions now Mac-40GB, Windows Vista-40GB, and Data (Fat32)-70GB accessible from both which stores my files, music, etc.

Note that Vista takes some time to boot and unlike OSX it shows a blank screen during that time. But boy! Vista rocks on a Macbook.

One thing to add in step b> I resized mac partition by booting from the leopard OSX install CD and selecting Disk Utility from the menu bar. First resize the mac partition then add another partition of free space size. Bootcamp partition must not be touched.