Joey, I have been installing apps on both C: and D: drive, because I needed more space. I decided from the start to install every "personnally useful" application like audio, photography, conception etc on the D: drive, and the basic applications on C:. I have never had any single problem in 2 or 3 years, and I did that on XP, Vista and now W7.
Same for the documents, in windows it's of course easy to move another location, it's just simple settings to do. And with W7, the "Libraries" are immensely practical. In one clic you can see every file you like from every folder you decided it would search in. For example, I have a "Tablature" library, it shows all my useful tablatures from a lot of places in the computer, and, from different locations in the D: drive.
On my next computer, I would do exactly how you do.