How did I get a Boot and System partition?

In the MS world the System partition is the partition that the BIOS boot straps and the Boot partition is the partition from which the operating system is loaded.

It's not unusual that a person will decide to install XP in a small OS only partition then create one or more data/application only partitions. There is nothing wrong with this approach however doing an OS reinstall can be an adventure. At times, for whatever reason, the decision is made to do a fresh OS reinstall. The easiest way to avoid trouble is to simply reformat the target partition. Where people get into trouble is deleting and recreating the OS partition. The XP setup engine will automatically create an extended partition to contain any new partitions if it detects there is at least one other primary on the drive. In practical terms what this means is that if you started with a C: and D: drive configuration, where both are currently primary partitions, or actually more likely C:, E: with the D: drive referring to the CD/DVD drive, with the second partition created as a primary, then setup will create the new partition as a logical volume in an extended partition on the fly. After install if you look in the diskmgmt.msc you'll see something like the following:

Note that you now have a seperate Boot and System partition.  Notice also that the Boot partition is surrounded by a green border. If you look at the color legend you'll see this indicates the partition resides in an extended partition. The blue border at the top of the graphic box indicating the location of the partition is another indication of the fact this is a logical volume. As long as this arrangement is agreeable there's no need to go further. Note however that in this configuration the D: drive is critical to system startup. There are three files in the root that are involved in starting the OS and if these are damaged or deleted the system will not start. Literally this means that you cannot format the drive or otherwise delete all the contents. "Correcting" this situation is relatively easy with 3rd party tools but is rather difficult without.