Okay, i've now:

rooted & partitioned my SD Card.

How can i get apps to run off them? I've been into Settings > SD Card & Phone Storage.

I can see "SD card" and "SD card secondary". Under "Internal phone storage" there is 34MB available. I have just downloaded 2 apps from the market and its gone from 35MB available to 34MB in the phone memory. this of course means that the apps are still being saved in the phone's storage after partitioning.

How do i get it to save in the ext2 storage directly from the market?

and is there only 34MB because of the android 1.5 donut AND the Cyanogen 4.0.4 rom running on the phone system?

Thanks