The virtual machine definition itself will occupy little space. The thing that will occupy space is the virtual disk where the client OS will be installed, as long as the possible snapshots you'll take1.
Normally the disks are installed in a directory called VirtualBox VMs
under your home; so it will by default occupy space in your home partition. Native Virtualbox virtual disks are dinamical; they will grow till occupying the allocated space (10G in your case) when the guest OS will use the space.
To check where you have yor disks, open "settings":
...as you see, I have mine in another partition --- namely one mounted on /home/vbox
. To create the virtual disk (VDI) in a non standard place, you simply select the directory where to put it on creation (you can move it later too, in a lot of way, the most easy being to move the containing directory and put a symlink in its place).
The VDI is a file as much as Linux is concerned, so you cannot put it in an unallocated space on disk2, so you have to partition, format and mount your unallocated space beforehand.
Footnotes:
1 and it will grow up, but it will not grow down --- this is much more complex. In my experience, 10G is far too little for a Windows installation --- especially if you plan to put Office on it.
2 well, you probably can. But it's not a standard way to do it.