I can see several problems. And first, Pat is correct in emphasizing saving your data. If the new partition is a copy of the original C: the data may be duplicated in it.
The fact they both say C: and show as the Boot partition I would think means the same partition identifier is being used for both, probably a result of the third party software.
Your drive shows as Dynamic. That configuration is normally for RAID setups. If you did not set it as Dynamic yourself, it may have been done when trying to add too many partitions to a MBR configured drive, since they can normally only handle 4 primary partitions. Thus, more than likely why Windows 8 would not install.