Windows bootloader is not capable of booting Linux, but chainloading some capable bootloader has been possible since a long time.
Yes, it's called grub4dos.
I wouldn't know about grub4dos, but a lilo bootsector file could be added to windows boot.ini [disclaimer: last windows version I've seen is XP, in case anything changed since].
In a similar way, if besides from windows FreeDOS is installed, then a bootsector file could easily by sys'ed, its path added to windows boot.ini, and after booting FreeDOS, one of the various Linux loader executables could be run.
Also, recent versions of extlinux support NTFS.
No. The TC support (although through some 3rd-party hacks) embedded installation.
You have already been asked what exactly you want to do in Reply #3, and it is still not clear at all what you have in mind as "embedded install". Various suggestions have been made, including co-linux which is about as embedded as it could get.
ntfs write support is provided by the ntfs-3g extension, but to access a PPR on ntfs remastering is required to include the extension in rootfs.
If this would be integrated into mainline than TC could use grub4dos to install it into NTFS partition and boot in using win bootloader as yet another version of windows without the need to fiddle with partitions at all.
As far as I understand, decision of devs is that only ext*fs and FAT* are supported in base, and further block devices fs support is provided per extensions which does not just concern ntfs which can only safely be written to with the third party driver from tuxera, but also all other native linux block device fs's.
A FAT* partition can easily serve for common use by linux and windows, as it is reliably supported by both.