The screen shot and the info are excellent. Your solution is so very simple.
But first to answer some of your questions, not in any special order. The only reason a hard drive (your external drive) would have or need an "Active" partition is if at one time a OS was installed on it. Even if the OS is deleted, the "Active" status remains.
If the external hard drive and an internal hard drive (drive 0) are connected to the system when an OS is installed on the external hard drive, the Windows 7 installer will, by design, look for the "Active" partition on the FIRST drive in boot order (drive
0) and place the boot code there. If it does not find an "Active" partition it will use the first empty space available. So If there was empty space on Drive 0, then the Windows 7 installer would have by design created the 100MB partition there.
If you do not need to boot to the external drive, I suggest you remove the "Active" tag as it may cause complications later.
SIMPLIFY the installation of any OS by only connecting the hard drive you are installing to.
You can only extend a partition into EMPTY space. You must shrink a partition first to create the empty space and then extend the next partition into the empty space. However, the Windows Disk Management Utility is limited in what it can do. For example
it can not extend a partition to the LEFT. You need a third party utility like Partition Wizard for a complete utility.
Your solution is simple and can all be done from Windows 7. First create a simple volume in the unallocated space at the front of the drive. Make it exactly 100MB, give it a drive letter, mark it as "Active", and format it as NTFS. Next assign a drive letter
to the current "System Reserved" partition, any letter is ok. Now copy all the files from the old "System Reserved" to the new "System Reserved". You can do this because you gave them drive letters. When the copy is done, go back and remove the drive letter
from the "Active" "System Reserved" partition and reboot. If there is any problem rebooting just do the "Startup Repair".
After reboot, you can delete the old "System Reserved" partition and extend C: into the empty space.
Cheers!
Robert