I have long been a proponent of using two hard drives in media systems. There are two significant reasons why this is a good idea.
Due to the nature of hard drive I/O and system memory, you can expect to see an increase in performance when your system files are located on drive C:, but your data files are located on drive D:. A lot happens on drive C:. Your system files reside there along with your applicaiton files. Your temp folder is also located there as well as the file use for memory page swapping. When an application is running, DLLs used by the application can be loaded an unloaded from time to time. When physical memory is fills up, then less-recently-used data is swapped out of memory to the hard drive so that new more-recently-used data can be accessed. These things keep drive C: busy. If you then also try to stream a video file from drive C:, that is just one more thing competing with access to the hard drive.
However, if your video file is streaming from drive D:, then there is no competition for hard drive read time. Its not likely that drive D: will be used for any other system purposes so it will remain free to read and serve up the bits of your video file without interruption. So the first benefit is performance. So lets look at the second benfit.
There are times when reinstalling the OS is just something that needs to be done. In some cases, its even best to reformat the hard drive in the process. If your SongShow Plus data files are also locatd on drive C:, then you will need to go through the careful process to back them up prior reinstallation, and then restore them when reinstallation is complete. If your files are on drive D:, however, they will not be touched in the reformatting and reinstallation process.
You can also use this method to do more sophisticated things like multiple system boot partitions for testing purposes. We recently did this for a new computer at my church. When setting up this new computer, we wanted to be able to test Windows 7, but were also concerned about possible stability issues in these early phases of compatibility work. I suggested that we build a machine with two hard drives, and that the first hard drive be partitioned to boot both Windows 7 and Windows XP. The SongShow Plus installations on each partition pointed to data files on drive D:. It turns out that it was a good idea because we did discover a problem that was (mostly) resolved by booting into XP. By placing the data files on drive D:, it was a simple matter to boot into Windows XP when necessary and back to Windows 7 for further testing.
Drive C: for system files, drive D: for data files: A good idea.