Separate partitions are an excellent idea. They make backups and reinstallation infinitely simpler.
The first step is to create a new partition. Take a look at my reply here: for some
suggestions on a partition application.
Next, copy the My Documents folder to the new partition.
Finally, you need to point to the new folder. Get Tweak UI XP if you don't already have it:
http://www.microsoft.com/windowsxp/downloads/powertoys/xppowertoys.mspx and install it. Open the Control Panel and run Tweak UI.
Expand the "My Computer" branch and select "Special Folders". Now select "My Documents" from the list box and click "Change
Location". Read the warning, click Yes, and browse to the new folder (the one on the new drive). Click okay and you're done, well
almost, reboot and then you're done. (You may not have to reboot but it's better to be sure.)
Make sure that no files were created or changed after you copied them (it's possible). If there are, then copy them over now, and
then you can delete the old "My Documents".
You can change the location of several other folders like this as well, which I recommend (but don't go overboard, not all of them
need to be changed).
That tab in Tweak UI gives you a tip. It tells you that you can skip the Tweak UI step by just moving the folder to the new
location. This does work sometimes, with some folders; it will move the files and alter the special folder to point to the new
location in one step. However, it won't work if the desktop.ini file in the folder is missing or damaged, and may not be able to
move the folder or files if they are locked (in use). You will have to manually point to the new folder and move the remaining
files after rebooting.
HTH