I have Xubuntu 11.04 burned to a CD, now when installing I assume the 3 main choices are there: Install along side Windows, replace windows and custom config. When choosing the “along side windows” option, would it be possible to partition my main drive and install xubuntu on that so I could choose between the OSs when booting my laptop?

It seems like that’s what will happen when you chose that option. Details are here: https://help.ubuntu.com/community/WindowsDualBoot