Yes, normal install will. I want to clear something up. Open partition magic and look at the drives. The first logical partition will be hda5 under linux, the second, hda6, and so on. I just assumed it would be the first logical that you will install to.
Now that you have an ext2 partition, Linux will pick it up as a Linux partition. The reason I told you to do this, is that it makes it a little easier. Select 'automatic paritioning' for that partition. Then, if given the option, use the ext3 format instead (if it doesn't do it for you already). It is a little better than ext2. ext2 is still fine however.
Any install will give you the choice of bootloader. By default, Red Hat will be GRUB on the Master Boot Record. You won't have to change anything. Just accept the defaults. It is also better to perform an Expert install. You can then install what packages you want. If you are unsure, just select 'Work Station' and it will install the typical workstation components. You can always add more packages later.