You will need a registry hack to change the default install path. Usually can be done with a tweaking program. x-setup can do this for you. Its free for 30 days.
With regards to the placing of Windows XP, it all depends on what you will be using your computer for?
Video Editing.
Install Windows on 1st Disk. Partition this disk if you want.
Use the 2nd disk as the data disk for the video files. DO NOT partition.
Office/Internet/Gaming
Install Windows on 1st Disk. Partition this disk if you want.
On 2nd Disk, create partition of around 5 gig at the start of the disk. Use this partion to place your swap file. Partition the rest of the disk as you see fit.
On all of the above, im assuming you will be using the smaller 120 gig drive as the 1st drive.
Alternative Partitioning
Install Windows on 1st Disk. Partition this as you wish.
Create 5 gig partition at start of 2nd disk for swap file.
Create 40-50 gig partition either on 2nd disk to install applications, etc.
Use 1st Disk to store date.
Im assuming you will be using the 250gig disk as the 1st disk here.
Other suggestions are to
a. buy another 250gig hdd drive and run it a raid configuration.
b. dont install programs unless you cant live without it (the more programs, the slower your machine... not by much on each install, but it all mounts up in the end)
c. buy decent defragmentation software and keep your drives defragged. Windows defrag isnt really upto much.
d. Disable uneeded system tray software (you probably dont need it all running)
e Use nLite to strip windows of software bloat and slimstream drivers, sp2, etc in one go.