How to install Windows and Linux and make GRUB to work

Partition the disk with linux fdisk
Set the Windows system partition type to NTFS
Make ALL other partitions invisible to Windows (e.g. type ext3)
Install the Windows and under no circumstances let it change the partition table (let it just format the system partition)
Begin the Linux installation and change, if you want, type of some other partitions to make them visible to the Windows (e.g. from ext3 to FAT32 or NTFS)
Proceed with the Linux installation and in appropriate place confirm, that you do want to install the GRUB boot loader in Master Boot Record.
You are almost done. Everything should be working, you have the choice to boot either to Windows or to Linux.
The only thing which is left to do is formatting of non-system partitions under Windows. You can do this easy using the windows system tools.

Boot from CD-based Linux (e.g. Morphix)
Mount the Linux root partition (e.g. mount /dev/hda5 /mnt/hda5 )
Change directory to 'usr/sbin' (e.g. cd /mnt/hda5/usr/sbin ) There should be a 'grub-install' script there.
Find and edit line "prefix=/" --->>> "prefix=/mnt/hda5" e.g. to the place where you mount the Linux root partition
Stay in the directory where 'grub-install' script is ( e.g /mnt/hda5/sbin).
Run the script as follows:
./grub-install --root-directory=/mnt/hda5 --grub-shell=/mnt/hda5/sbin/grub /dev/hda
Reboot and enjoy.
P.S. Do not forget to roll back the changes in the 'grub-install' script if you have done some.
1) mounted the partition and gone to usr/sbin as above
2) started the GRUB shell directly
./grub --device-map=/mnt/hda5/boot/grub/device.map
grub> root (hd0,4)
grub> setup (hd0)
grub> quit