A solution - but still looking for a better one!
After having a bad experience with WinClone I looked at other solutions and found NetRestore and iPartition. NetRestore seem to be the thing but was fairly complicated. iPartition seems to be a great tool for resizing partitions but the price is $50 US which I may come back and purchase.
Anyway I kept reading about people having success with WinClone and gave it more study. It worked for me as related below.
I am using a 15" SR MBP as my host machine (I have been inside of it several times and can swap drives inside of 15 minutes).
Anyway the test was a 250GB drive fairly evenly spit up between OSX and BootCamp, both partitions bootable and VMware Fusion installed to run the BootCamp WinXP-SP2 as virtual machine (this was 116GB BootCamp partition).
The objective was to reduce the BootCamp partition to about 60GB.
As an aside, BootCamp Assistant will not run and partition an external drive.
The process:
Boot from the internal Leopard OSX partition.
Install WinClone.
Run the VMware DVD and remove VMware.
Run WinClone and backup the BootCamp partition to one of your folders.
Do your home work here... make the proper WinClone selection for relocating and resizing the partition (I checked the first and third boxes). The WinClone backup takes a couple of minutes per GB so go have a beer or something. My final WinClone image was 22GBs.
At this point I suggest that you run a SuperDuper image off to an external drive just as a precaution. In my case, I copied the image off to another 250GB 2.5" drive. I then swapped in the imaged drive and used it to prove the process and then put the oringinal drive back into place and continued with the process as defined here.
Fire up BootCamp Assistant and follow the prompts to "restore" the boot drive to a single partition. After this I rebooted just to insure things were cool.
Again go into BootCamp Assistant and this time create the new BootCamp partition to the desired size (I went for a 61GB partition). Then when the Assistant completes the format portion of the process and gives you the alternaive of "install later" or to start the Windows installation now; choose install later.
Start WinClone again when it let you, click on restore, and choose the WinClone backup that you made above. Then choose the destination drive which is the BootCamp partition.
Click on the Calculate Size button and it will return the size of the image.. by 22GB image was reported as 28GB... hummm.
The click on Restore button. For me this started the restore process which took a little over an hour.
WinClone will tell you that it is done, you click on the prompt and it does some clean up then it is really done. Close WinClone.
Reboot, hold down the option key and choose to boot into Windows.
Windows starts and goes into Blue Screen checking file system process.
When this complete it reboots (I held the option key and again selected to boot Windows. The system booted into Windows (yea!) and a dialog box opens up indicating that the system has finished installing new hardware, please reboot. Reboot into Windows and I am good to go. Everything seems to work and the size of drive C: is 61GBs...
This is a long way around to accomplish resizing both partitions but it only cost time. And it is repeatable, I have completed the restore end of the process twice (I have two nearly identical 250GB hard drives).
Oh yes, you can now reinstall VMware and use the new BootCamp as a virtual machine. I have no current experience with Parallels, but you would probably want to un-install before resizing the BootCamp partition.
I hope this helps someone with their issues on resizing partitions.
Neil.