I have had troubles on one computer where the XP installer won't work on my 2nd
hard drive. But on other computers I have had no such troubles. I think it is
a bios thing. (I have a computer with XP pro on F: and XP pro on G: - each on
a separate hard drive)
All versions of Windows do use the hardware C: drive to help boot. The boot
menu that comes with later versions of Windows is on C:. But Windows itself
has never needed to be on C:.
If you want to install a different operating system than Windows, there are
other boot managers available.