What is the difference between local disk C and local disk D? I have about 4 GB space left in C and D is empty. Is there any advantage in putting a system image on D? Are both C and D contained in the hard drive, and if the hard drive goes bad you lose it all anyway?
It depends. C could be a whole hard drive, and D a different hard drive, or they could both be on the same hard drive. The way to tell is look in disk management, and look at the disks, and see where the volumes(C and D) are.
If they are on the same disk, and the disks dies, both C and D will be unavailable.