I've never tried DSL, but it seems to have a rather minimalist installer. It doesn't look as though it offers the automatic option, so you'll need to create the two partitions manually. One will be for swap, and won't have any associated mount point, and the other will be for the OS and will have the mount point '/'.
The references hda1, hda5, etc. are assigned by the system, not by you. Primary partitions on the first IDE hard disk are named hda1-4, and higher numbers are for logical partitions. So what you have at present is one primary partition hda1 (Windows drive C) with the rest of the disk assigned to an extended partition; in that extended partition there is one logical partition hda5 (Windows drive D), and the rest of the extended space is free. So your two linux partitions will be hda6 and hda7.