Installing Bactrack to the hard drive is easy. I actually dual boot between Xp pro and Backtrack.  It makes more sense to do that because Backtrack requires such little space.
I used Partition Magic to create a Linux partition, but you can do it with the qparted utility on Backtrack if you wish. 
After creating the new partition, boot up to the Backtrack cd and then click on  Kstart to open up the program menu. Click on Backtrack/misc/ Backtrack installer.
There you will see 3 drop down boxes.  Make sure the top reads  /boot. The second to the top should read /mnt/hda3 assuming your Linux partition is identified as hda3. You can check that with qparted.  The 3rd from the top should read /dev/hda3. Make sure you choose REAL (2550) and not the USB install.   
Click on install and wait. It usually hangs for a long time on 80% so don’t abort if that happens. Just get a cup of coffee and come back in a few.
Why install it on the hard drive? 1. Its will work faster. 2. Updates will stay until the next session.  3. You can add modules and expand your install beyond what your CD can hold.
4. Its easier to save packets to your hard drive rather than mounting a usb drive every time.

Obviously your linux install partitions are logical drives. The first logical drive in linux is always /dev/hda5 (the partition table in the MBR has 4 entries which can hold hda1-hda4) no matter how many primary partitions are on the disk.

Yes, you're both right. They are logical drives.