Hi, Hi…
Right idea, wrong app.
This is going to involve completely erasing your HD, so if there's anything on there you want to keep, back it up first!
After booting from the OS9 disk just as you did, launch "Drive Setup". Then:
Select your HD, then click "Initialize"
In the dialog box, click "Custom Setup"
From the "Partition Scheme" menu, choose 2
Now drag the horizontal lines in the "Volumes" map to create the small volume you need along with the much larger main volume
Click OK, then "Initialize"
When finished, you'll have two HD icons on the desktop. One drive, two volumes.
Piece of cake!