Unable to create a partition to install Mac OS X
How are you doing this? What are you booted to? You can not partition a drive which you are running. 

Try inserting the install DVD which came with your computer and see if you can repartition or erase that way. If you still get the error message, select the drive you want to erase on the right side and then in the top toolbox select 'Eject'. If it ejects, rock on. Otherwise you might have an issue where the drive is damaged and can not be unmounted as the active OS is attempting to read the Volume Header and getting an error kicked backed.