I run all my computers with a "C" windows Partition of 30-40 Gigs and a "D" Data partition for everything else. I do install all programs on the "C" drive. I really don't want to install any programs on the "D" just because of the reinstall issue, and because i do not want to spend days reinstalling software and getting the system setting to where i like it. I like using just a 30 gig "C" partition because that is really all you need for Windows. A problem came up for me when i did try installing all the software on a separate partition in that when i had to reinstall XP the new install did not have the software registered, so the new OS could not find the programs. So, it is easier to just go ahead and install the programs on the "C" drive. The largest portion i have used for the whole system is about 16 gigs. Once i exceeded 20 gigs with a install of Pinnacle movie editing software that was over 5 gigs. The problem was that pinnacle kept on crashing, untill i finally just got rid of it and bought the Sony Vegas software. Even 20 gigs of software will still give you plenty of room for the swap file and temp files on the "C" drive. I did have to set a second swap file setting in the sony vegas software so the "D" drive could also be used for the swap file.
I use Ghost to make my own recovery dvd's. With Ghost when i reinstall the system from the gho files all the software and setting are there that i had set at the time i made the ghost images. What that does is make it so a hour after the computer completely crashes it is back up and running normally again. This lets me experment with software and not worry about borking the whole system.
Heres a real good guide on Ghost.http://ghost.radified.com/