I have been doing this kind of work for some years now. My system has three hard drives installed. The first drive is the system (Windows XP) and the other two i've assigned as capture and export. I capture all the material to the capture drive and when i've finished the editing I export from my video editing software to the export drive ready to burn to DVD etc., I,m quite sure this principle will work with just one extra hard drive as you have, although perhaps a little slow because you are using the same drive to capture, edit and export. There is no need to put any of the system on your extra drive. All you have to do is partition and format the drive NTFS and off you go.