Dividing harddisk depends on role of your computer. Generally, I recommend dividing the drive into 2-3 partitions:
 

	Volume	Purpose	Policy	Size	File System
	C:	system and  applications	No application data should be on this drive, if possible.	10-20 GB	NTFS
	D:	personal data	No applications here (only if you are developing some). This drive should contain all YOUR data, that cannot be restored from internet, CD and so on. This drive is subject to backup. FAT32 partition slightly reduces speed, but is much more reliable than NTFS. in case of data damage can be recovered better and simpler. Size limit is 32 GB under Windows XP (127 GB if you can format it under Windows 98 Second Edition.)	2-32 GB	FAT32
	E:	other data, temporary applications	This should be 'scratch' drive. Any stuff not suitable for previous drives goes here. CD images, downloads, movies, music, video processing files, swapfiles (temporary working files) should be all here.	Rest	NTFS

• If you intend to have no special data stored in your computer, just movies and music, probably you can leave out partition for personal data (D: in table above).

• If you want to use your PC only to work with one application (storing no long-term data), or to gaming, single disk volume could be sufficient. You do not need to divide disk drive.

Comparison of file systems:

	NTFS	FAT32
Drive Size Limit	no apparent limit	32 GB (127 GB)
File Size Limit	disk size	4GB
File Encryption	yes	-
File Access Control	yes	-
Performance	higher	lower
Reliability	lower	higher
Recoverability	lower	higher
Recommendation	Boots and runs faster, recommended for system volumes. Also use for large drive volumes or where you need operate with large files (e.g. video processing). Use if you need advanced security for your files - user access rights or file encryption.	More suitable for volumes containing common personal data. Easier recovery of deleted files. Easier data recovery from crashed volumes. Skip 32 GB limit using Windows 98 Second Edition or by using some formatting utilities.

Resources:

• Microsoft Knowledge Base 184006 Limitations of FAT32 File System

• Microsoft Knowledge Base 314463 Limitations of the FAT32 File System in Windows XP

Data On Your Disk

One problem of Windows is that it places many special folders (My Documents, Desktop) and files (Windows Address Book's directory, e-mail storage files of Outlook and Outlook Express) onto the system disk – disk where Windows and other applications are installed. If system disk crashes, you also lose some of your data. You can prevent this by redirecting them to data-dedicated disk drive/volume. Also collect them under the roof of single folder and your navigation and backup process will simplify.

The best practice is to change locations of special folders after Windows (and Office) has been installed. Drag them into new location using right mouse button. From menu that appears select Move Here. If full path is not specified, follow part from C:\Documents And Settings\<UserName>.  <UserName> stands for name of user, for which you process the moves. I strongly recommend to log on as this user before moving folders.

Special Folder	Original Location relative to C:\Documents And Settings\<UserName>		Recommended New Location (different path/filename can be also used)
My Documents	My Documents		D:\_(UserName)
Desktop	Desktop		D:\_(UserName)\Desktop
Favorites	Favorites		D:\_(UserName)\Favorites
Windows Address Book		Application Data\Microsoft\Address Book\default.wab	D:\_(UserName)\default.wab
		Move file and then change path stored at HKEY_CURRENT_USER\Software\Microsoft\WAB\WAB4\Wab File Name\(Default) using regedit.exe. Note: Do it immediately after logon, before you run Outlook Express or Address Book. If you need more details, see Microsoft Knowledge Base Article 156828.
Mail and News		Local Settings\Application Data\Identities\{<identity number>}\Microsoft\Outlook Express	D:\_(UserName)\Mail
		Run Outlook Express. On the Tools menu, click Options. Click the Maintenance tab, and then click Store Folder. Click Change, specify the folder that you want to use to store your messages, and then click OK. If you need more details, see Microsoft Knowledge Base Article 175037.
Microsoft Outlook Data File		Local Settings\Application Data\Microsoft\Outlook\Outlook.pst	D:\_(UserName)\Mail\Outlook.pst
		Copy (not move) your data file. Run Outlook. On the File menu, click Data File Management. Add data file into list and press OK. On the Tools menu click E-mail Accounts and then View or change existing... Switch Deliver new e-mail... to your second data file (they will have same name, it's OK), press OK.  On the File menu, click Data File Management again. Remove old data file. Remove if from disk. If you need more details, see Move your Outlook data file to another location at Microsoft website.
Word User Templates	Application Data\Microsoft\Templates		D:\_(UserName)\Settings\Templates
CD Burning	Local Settings\Application Data\Microsoft\CD Burning		D:\_(UserName)\ToBeBurned
Other Folders/Files	There are other special folders, but of lesser importance (such as Start Menu). Their content is dependent on installed applications, there is no need to backup them. It is better to leave them on application disk (C:).		(changes not recommended)

After redirecting these folders, only small part of data won't be stored in your data folder (e.g. MSN Messenger history), but in most of cases you can correct it via preferences of specific application.