Why is postgresql still consuming space on my other drive?
I do not have all information for pointing to the source of your problem, but I think you should create your postgresql cluster in a different way. Instead of using the postgresql generic command pg_ctl, you should use the Debian/Ubuntu provided command pg_createcluster. This way you will have a working setup that survives reboot, you may specify your data directory and your log directory, you may also specify the start policy in order to activate it automatically on boot. And you may use all cluster commands: pg_lsclusters, pg_upgradecluster, and so on.

Every cluster uses three directories:


/etc/postgresql/8.4/CLUSTERNAME, for its configuration
your data directory, for all your data and WAL (default /var/lib/postgres/8.4/CLUSTERNAME)
your log directory, for your logs (default /var/log/postgresql)