Sorry, I've never myself attempted to try that, but any operating system before Vista was able to install itself to another directory on the same partition as an existing one.
Hence me not being sure which you were referring to. Anyway, I hope the rest of my post was able to help you regarding the Nvidia issue.
Also, dual boot should still work fine, but you might start seeing multiple windows entries for the same thing. You can see them by going to your command prompt and navigating to the system32 directory inside the Vista Windows directory. Then run bcdedit.exe (it's the boot config editor) and run it with the help switch. It should have a command to display the entries and you should be able to delete the old one. However, it's not critical that you do, it's more of a neatness thing - if you leave it there, you'll still be able to boot fine.
That all being said, I've not done a Vista upgrade before, so results may vary.