Think it makes sense.
If you want to format C: and do a clean install, and remove everything
from D: Then boot to the CD and choose the new installation. They have
prompts that will allow you to format the drive and even remove
partitions. In that instance you would not need to save any files XP
will create what is needed. It is a good idea to know what drivers you
need and back these up.
Other thought.
Does the Internet connection on D: work?
If so, check your settings in the network properties. Make note of the
drivers for the NIC also.
Couple ways to get there.
Start, Control Panel, Network and Internet connections, Network
Connections, Local connection, right click Properties, double left click
the Internet Protocol. Write down the settings and check the advanced
tabs respective attributes.
Easier route, right click the My Network Places icon, select Properties,
et al.
After you've documented everything, boot up the C: and check the same
properties and NIC driver versions. Change as needed.
Or, uninstall the IP and setup with the info from D:
Once that works and you are happy with C:
Open and save the hidden boot.ini file (on the system drive, normally C)
as boot.old.
Edit the file to remove the reference to the D: drive. Good article on
the editing here.
http://support.microsoft.com/default.aspx?scid=kb;en-us;289022&Product=winxp