Well I eventually did this, as I did not feel super confident about other file systems:
1. boot up old system (3.1) with new HD (17GB) attached and recognized.
2. copied FastFileSystem from OS3.5 to L:
3. --> HDToolBox and made sure the new file system was updated there. Made 1 boot partition less then 2GB and quick formatted that.
3. Reboot and started AOS3.9 install and pointed it to the new drive (using a USB cdrom on the DENEB).
4. Rebooted to new system.
5. --> HDToolBox added another partition that took up the remaining 15GB. Saved and rebooted (hoping my new 3.9 was still there).
6. Yes it was! Now I just quick formatted the new 15GB Data: partition.
This all worked, happy with just 2 partitions! AOS3.9 was sitting here, had solutions for what I wanted, so why not use it.