I'm assuming that you are accessing the partition manager from the install disk?
I think what is happening is that when you click on the empty partition, Vista is telling you that it doesn't have enough room to install itself. How large are your partitions?
From what I can tell, you have already installed Vista on the first partition and just want to resize it to fill the entire drive. I haven't used Vista for a while, but I remember there being a "resize partition" option that could achieve this. If you haven't used your Vista install yet, you can select the "system reserved C:" partition and delete that so that you have one continuous partition that you can install Vista on. This will not work while booted into Vista - only from the install disk.
By the way, if you want Linux and have a USB stick, you can still install it (see https://help.ubuntu.com/community/In...n/FromUSBStick
for Ubuntu instructions; other variants probably have similar options). This will only work if your computer supports booting from USB drives - see "Booting the Computer From USB" in the provided link.
Please tell me if this is unclear.