Thanks for the replies guys! Interesting point about using the bigger hard drive for the OS. My 20gb drive is a 3 year old Western Digital 7200rpm with a 2MB buffer, while the 120gb drive is 9 months old Western Digital 7200rpm 8MB buffer.
I guess the logic behind putting the OS and program files on the smaller drive is that I could keep the larger one for things like scenery files for flight sim, music and movies (I use Adobe Premier for editing our home camcorder footage). My perception (probably wrong) is that the system would run faster if this sort of data was being accessed on independent drives rather than just one.
If I installed XP on the larger drive could I then just uninstall/delete the old OS's (98, W2k and XP) on the smaller drive. Would I still have to retain the 20gb drive as a C: drive as this would have my boot.ini file on?