Updating ubuntu from dual boot windows 7
Even without a dual boot computer it is recommended to keep your data on a separate partition, unless you do backups on external media.
If you like Windows' user folder structure, don't worry.
Modern OSes (Windows newer than 7 and 64 bits; Ubuntu newer than 12.04.2 and 64 bits) can be booted and installed in both EFI and BIOS modes.
You just have to know how the primary OS was installed and boot from the installation media of the second one in the right mode. First of all you must decide where you install it and make some room for it. One is that whenever you'll want to do a clean install of the OS, you'll have to backup all your personal files and folders on a different drive, otherwise you'll lose everything. You'll need to access your files from both the operating systems.
Yes, I know you have free space on the partition, but it needs to be outside of partition. It is highly recommended to choose the last partition in order not to lose data. After determining the maximum available shrink space, you will be prompted with a dialog where you can choose the shrink size.To do that open Disk Management by right clicking Computer and choosing Manage. Let's have a look at a common (yet not so good) configuration. This is no problem with Ubuntu, because it reads NTFS partitions.