If you would like to install Ubuntu alongside Windows on a partition you will need to format your partition. Ubuntu uses the ext3 or etx4 format, unlike Windows which uses NTFS. The installer will handle the formatting.
If you have multiply hardrives in your computer you will need to select which disk you would like to install to, otherwise "selecting drive" refers to partitions.
If you are using Ubuntu 12.04 you can use WUBI to install Ubuntu on a virtual partition within Windows, however this method is not recommended.
If you just want to try Ubuntu temporarily you can run a live session, running it off of a LiveCD (which you create when you burn the ISO to a disk) and play around with it without touching your existing Windows installation. Just select "Try Ubuntu without installing" after booting your installation disk/LiveCD.
So to answer your question you will need to format drive
G: as ext3/4 before installing, which the installer will manage. "selecting drive" usually means selecting a partition to install Ubuntu onto.
Space allocation will depend on how your drives are configured and what installation method you are using, however "space allocation" in the general term means how much space you give Ubuntu to be installed on and use.
See also: How do I install Ubuntu?