Most applications, when installed, load values into the Windows registry. So if you reinstall Windows you wipe out those values and most likely need to reinstall the application. Therefore I just keep them on the C drive with Windows and see no value in having separate drives for them.
1. If you have C:\ as an image backup, no need to reinstall anything.
2. Yes, if you don't have the image, you have to reinstall the application more often than not (not so w/ many games BTW) but you don't have to install all the program updates, customizations, toolbars and everything else.