Not an answer, but here's a forum thread of someone having the same issue and some discussion around it.

On Sat, May 30, 2009 at 5:37 PM, Craig White <craigwhite@azapple.com> wrote:
On Sat, 2009-05-30 at 19:12 -0500, Mike Hoy wrote:
>         this is just a visual representation of the same hard drive we
>         were
>         talking about the other day and wondering why you couldn't get
>         it to
>         boot Windows via grub.
>
>         Yes, it seems like an illogical setup and it there may be no
>         good day to
>         fix it other than backing stuff up and starting over.
>
>         Craig
> I suppose I could reinstall xp. That would overwrite the MBR. Then I
> would have to reinstall the grub boot loader. I've read somewhere that
> I can do that from the Ubuntu live cd. Well, thanks guys. Guess I'll
> give up and reinstall at some later date when it's imperative that I
> get windoze up and running again.
----
you don't need to reinstall windows to over-write the MBR, you can do
that from the 'repair console' on Windows XP. The MBR isn't your problem
though. You can rewrite and use WIndows Boot Loader if you want instead
of grub. It may very well be that if you run the 'repair console' and
execute 'FIXBOOT' that may fix the Windows startup problem.

I think your issues aren't with grub either.

I would suspect that somewhere with gparted or with the Ubuntu installer
which probably uses parted on the back end, somewhere the notion of
moving your WIndows into a larger 'extended' partition was the right
thing to do but apparently, it did not do a good job of it.

Craig




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