A hard disk is something you can hold in your hand, it has weight and dimensions and things you can point to. A hard disk is a thing, a tangible object. A hard drive is not as clearly defined. In the Windows world a drive is really an area on a hard disk and not the hard disk itself. These areas are called partitions and there can be several. With Windows the distinction is pretty sloppy so people get really confused.
A hard disk (the physical thing) can be divided into parts by software and each part will appear as a separate hard disk. These divisions are only apparent though, they aren't real. When a hard disk ships from the factory it is useless, it can't be used for anything until it's been prepared. In a typical windows disk preparation, the entire disk is all there is, there are no subdivisions. Windows will call the entire disk, drive C: and everything saved to disk will be somewhere in drive C:.
I've configured my broswer (firefox) to save all downloads to the Downloads partition. Utility and non-Windows apps are installed in the Utils partition and all the Windows stuff goes in the Vista partition. All of this reduces the chance of a catastophic failure. I also periodically copy stuff to DVD as another safeguard. My experience has proved to me that by taking the time to do all this is well worth it.
You can also do all this from Linux but it's not a task for the weak at heart. You can install Linux and create the NTFS file systems (for Windows) when you create the Linux partitions (ext3 usually). While there's no reason to do it this way, it can be done if you want to try it.
Drive C: should be where all the operating system stuff lives; the Windows files. All other files should be stored on different partitions. In order to create partitions on a hard disk, you either format the existing drive, create new partitions and reinstall everything or you modify the existing configuration. I prefer the second option of course. I once used partitioning software like Partition Magic but my current laptop came with Vista installed so that software no longer works (big surprise there). Vista offers the capability to resize existing partitions so there's some hope, maybe.
Go to Start -> Settings -> Administrative Tools -> Computer Management -> Disk Management (as Administrator of course). You'll see the disk layout and, probably, a very large C: partition. Right-click that partition and select, Shrink Volume. If your computer is fairly new, there should be lots of free space on that partition. That free space is where you can add a new partition. Shrink the C: volume (partition) as much as you can, leaving enough for some future growth. After shrinking you can create a new volume.
The new volume will not need to be primary or bootable so make it a logical (secondary) partition type and give it the next available drive letter (D: probably). If there's still a lot of space left on the new partition, shrink it too and create still another partition (volume). I like at least three partitions when I have enough total disk space. After all this there should be two or more good sized partitions (Windows will refer to these new partitions as drives rather than partitions).
There's software out there that can also break up the huge C: drive into smaller pieces but if you can do it with Windows, try that first. What you want is a place to store all new, non-Microsoft, programs and data that won't be corrupted if the C: drive fails. Every time you install new software you should be prompted on where you want the program and files to go. Most programs will offer to install in C:\program files, don't do it. Change the install to put everything in another partition.
The Windows default of having only one partition is stupid and it risks data loss. Take the time and re-partition your hard disk. For much more detail and some examples, see this.
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