This link will provide more information on System Protection:
http://windows.microsoft.com/en-us/windows7/previous-versions-of-files-frequently-asked-questions
According to Microsoft you will need System Protection on the drive if you intend on using System Restore to recover files. Whether or not you decide to use System Protection I recommend you have a backup plan in place and use it.
You might want to read this -
http://lifehacker.com/5466794/the-complete-guide-to-windows-system-restore-its-better-than-you-remember - about System Restore. If you have many restore points you can delete some of the old ones and it will free up space on your hard drive.
As far as moving files goes you could simply copy the files (as long as they are not system or program files) to the D: drive. Don't use the cut and paste method in case something goes wrong. Copy the files and then delete the ones you copied to D: from C:.
Is drive D: a second physical drive or a partition with drive letter D: assigned to it. To find out do the following:
1) Click on Start
2) In the search box type diskmgmt.msc and press enter.
If Drive 0 is partitioned it will show the drive split with two drive letters - C: and D:
If there is a Drive 0 and Drive 1 then you have two physical hard drives.
If the D: drive is formatted as NTFS it will show it in Disk Management.
Take a look at this link which will explain it a bit better:
http://www.dummies.com/how-to/content/is-my-pc-hard-drive-partitioned.html
I only suggest that link because it explains it in easy to understand terms.