If I partition my primary drive, can I install a second version of my original DELL software (includes XP Home) on the new partition ?
This is NOT a standalone version of Windows it is the DELL install disk which includes other SW.

My original system partition is a few years old, with many installs/deletions of software and HW. I am sure this has bogged things down.

I would like to use my DELL recovery disk to build up a 2nd installation.
When I am sure it is updated with all patches and my SW is reinstalled, I could delete the original version.

The point of this is to keep me up and running while I do the fresh version.
It would also provide a fall-back if the new install screws up somehow.
I know how these things go, and it could be a week or so before the fresh version is ready to go.

DELL Dimension 8200
XP Home

No, it will not work, you will need a retail version of XP to install XP on a different partition. A restore disk will just delete the existing installation and install XP again.