In Microsoft Windows, the system partition and boot partition refer to:
The system partition can be different from the boot partition, although they are often on the same partition (drive C:). Windows setup places the initial system partition based on motherboard BIOS settings. Bitlocker requires a separate, unencrypted system partition for booting.
The master boot record is located at physical sector 0, just before the partition table, and is therefore not contained inside any of the logical partitions or volumes.
Despite of Microsoft's idiosyncratic terminology, it is possible to mark the boot partition as active and boot into it, if the partition is a primary partition, and the required files such as NTLDR and boot.ini for Windows XP or older Windows NT platforms exist on it. In a dual-boot scenario the system partition could be formatted with a FAT16 file system and contain an MS DOS operating system and a Recovery Console. The old DOS boot sector of this partition is saved in a file bootsect.dos (or similar), and used as entry in the NTLDR boot.ini file. The new boot sector of this partition looks for and starts NTLDR, while the image of the old DOS boot sector looks for and starts DOS. Note that DOS boot sectors look for different files depending on the original equipment manufacturer such as IBM for PC DOS or Microsoft for MS DOS.
Generally, newer boot schemes support older schemes; this is the reason why Microsoft operating systems are typically installed in chronological order (oldest OS first, newest OS last), and why attempts to "repair" critical sectors with tools designed for older operating systems can cause havoc for newer operating systems.
The new Windows Vista startup process supports the same and additional features; its boot sector looks for the new boot manager instead of NTLDR. Old fixmbr tools installing an NTLDR boot sector would destroy the newer boot sector, and therefore newer Windows versions typically use a separate system partition. The recommended layout consists of a primary hidden recovery partition followed by the primary NTFS system partition (marked as active for booting), and a separate boot partition (in Microsoft terminology), the latter could be either a primary partition or a logical disk in an extended partition mounted as drive C:. More convoluted layouts with an OEM partition, or simpler layouts with system = boot partition, are possible.
It is interesting to note that in operating systems other than Windows and DOS the definitions of boot partition and system partition are just the opposite: the boot partition contains the boot files and the system partitions hold the operating system files.
For example, in the standard Linux directory layout (Filesystem Hierarchy Standard), boot files (such as the kernel, initrd, and boot loader GRUB) are mounted at /boot/ while operating system files are mounted at / (the root directory); these may or may not be separate partitions, but they are mounted in the same hierarchy.