This is not recommended anymore: http://support.microsoft.com/kb/949977/en-us
When I use Windows, I always have separate partition for the data (D:). I have never tried to actually move the whole Users folder to D: though. Instead I moved folders with data such as Documents to D: manually after installing Windows.
After purchasing a couple of SSD’s for my laptops, I decided to install Windows 8 on them, and decided to use more sophisticated (and elegant) method of moving Users folder to D:, which leverages the soft link functionality of Windows.
I have read some howto’s about this and at first they look complicated, but it turns out it is pretty simple (about 3 lines of commands) and robust. As usual, it was so much better than manual way.
There are just a couple of things which can mess things up if you are not careful, and I wanted to share the experience so others can do this without trial and error.
I assume you already have separate partition D:.
Since no process should be using files in the C:\Users directory, you have to drop to the recovery mode command line prompt. There are two ways that I know of. You can do it by booting with installation DVD and also you can do it in installed Windows 8. I recommend the second method as it is much faster. It became very easy in Windows 8 since you can invoke this within running Windows.
Please see the following link for how-to: How to start the Recovery Environment Command Prompt in Windows 8
This is the first (a little bit) tricky part. For some reason when you drop to this command prompt the drive letters are different. In my case, it was always X: which was the secovery partition, and C: became D: and D: became E:. So when you are working in D: in the prompt, actually you are at C:. This can be confusing but once you figure it out it is not that bad. Anyway, if your drive letter mapping is different from mine, you have to adjust the following commands accordingly. Basically, when you make copies you use the letters assigned in the command prompt, but when you make the link, you have to use the letters that windows uses.
Two things are important in this step: 1) you have to use the correct drive letters, and 2) you have to use the exact options for robocopy. If you mess up 1), you won’t be able to log in, and if you mess up 2), then you might be able to log in but will have other problems.
Do the following to copy C:\Users to D:\Users. Again, keep in mind the drive letters are remapped:
X:> D: D:> robocopy /copyall /mir /xj Users E:\Users
/mir option will delete all files in the target if they do not exist in the source. Hence, if you already have D:\Users and want to keep the files, then use /E option:
D:> robocopy /copyall /E /xj Users E:\Users
Again, here D: is C: in actual, and E: is D: in actual. Among robocopy options, if you miss /copyall, then it will not copy the permission information, and after log-in your Windwos 8 apps will crash upon launching. Make sure you get 0 for failed column in the robocopy results output.
After verifying there were no error, do the following to remove the original C:\Users directory:
D:> rmdir /S /Q Users
You can also use BitLocker.
Then when boot, Windows will unlock D: so you can log in.