I've re-written the directions on this link to be cleaner and easier to read.
http://www.dyonisii.com/cgi-bin/waterwheel/index.pl?case=win&sub=mds

MOVING THE '\DOCUMENTS AND SETTINGS\' FOLDER TO ANOTHER DRIVE

The following is based on KB236621 but revised for XP.

1. Open Explorer.
2. Create a new folder called 'Documents and Settings' in
your desired drive.
3. Create a new profile with administrative permission and
call it "Mover".
4. Logoff then logon to the "Mover" account.
5. Copy all the folders inside 'C:\Documents and Settings\'
(except the 'LocalService', 'NetworkService', and 'Mover'
folders) to the new location. (The LocalService and
NetworkService folders will be re-created automatically.)
6. Open the Registry Editor and Find & Replace all
instances of "\Documents and Settings\", including:
- \Device\HarddiskVolume1\Documents and Settings\
- %%SystemRoot%%\Documents and Settings\
- %%SystemDrive%%\Documents and Settings\
- C:\Docume~1\
7. Shutdown your computer, wait 30 seconds then turn it on.
8. Logon to the 'Mover' account.
9. Repeat step 6.
10. Reboot and logon to your original account.
11. Test by renaming the '\Documents and Settings\' folder
in drive C. If you can rename it then it worked!
12. If everything is OK, then you can delete the 'Mover'
account that you created before.

ju.c