Should I keep my 2 TB Hard drive or split it (partition?)

Thanks for the insight! Yea I think I'll partition it then. Just wondering, how does Windows backup work? Does it automatically back up selected folders or a complete copy?

Better split it in several partitions.

Best answer selected by m00nlitblade.

Windows backup will backup your Operating System so that if something were to happen you could restore your OS to the state it was in at the time of the last backup. You can set the backup to be on any drive that you choose and when you partition a drive you give each partition a drive letter.

I recommend setting aside a small (~50 GB or so) partition on the new drive so that you can install a new O/S to it if you like. That way you can try out e.g. Win 8, Win Server 2012 Essentials, Linux, or whatever else you want without messing up your Windows install.

Next, you should definitely create a partition to back up your O/S, so that you don't have to go through the ugliness of reinstalling from DVD backups or from scratch if your SSD fails or gets corrupted. Be aware, though, that it if you can do so it would be better to have the backups located remotely - which means a different computer such as WHS 2011 or something else. Depends on your network topology.
Backing up a drive to itself isn't all that useful. Some HDDs fail gracefully so that you can still access some of the sectors when others go boink. But others just fail kaboom so that you can't even see the drive in BIOS or Device Manager. If you put your backup on the same device as the original and it goes boink, you didn't get any benefit from the backup. Again, remotely-stored and hosted backups are better.

If you are sharing folders with other computers, and one or more of those might use offline files w/ sync, then think about the amount of offline / cache space required. The behavior I've seen with offline folders is that they sometimes cache anything they find in that shared folder even if I don't ask them to (I'm not an expert on offline files, so you may know better). So if you share the root of a 2 TB volume, then the remote clients might end up trying to sync all 2 TB.

Finally, whether or not you can put any other partitions on a HDD used as a backup drive at all might depend on your backup software. WHS is not very friendly about allowing other things to exist on the WHS system backup drive, for example.

So:
50-75 GB secondary O/S partition
250 GB system backup partition (software permitting)
Rest is up to you.