1)
I believe you're correct, the MBR is on C. If you dual boot with a
Windows 9x OS, the 9x OS must be on C and the MBR is stored there as
well even though XP is then on some other drive. If you install XP
single boot, then it usually goes on the C drive with the Master Boot
Record.
2)
Yes, I install apps and OS and a portion of my data, mostly the
Outlook.pst and some other things that really belong with the
application, for example, my Quicken Data Files, on the same drive,
in my case as I'm single booting, the C drive.
3)
I agree with the approach of using the second hard drive for images.
I'd go a step further. The only reason I don't burn my images to CD
is they are too large but I'm considering a DVD burner in the near
future, just waiting for some industry compatibility issues to be
ironed out and for Mt. Rainer (
http://www.cdfreaks.com/article/75 and
http://www.mt-rainier.org/) to be made the default standard for
packet writing.
In any event, in addition to hard drive storage, I'd consider in
investing in a DVD burner to backup image files as well...I had three
hard drives go belly up in 1 year once so I'm fanatical about backup
and having more than one medium on which I store backups.