You may want to leave programs installing to C: and just keep your data (docs/pics/music/video etc) on the other partition(s)
That way you can backup and restore the entire s/w environment program folders/registry independently of the data they process
May also want to create another partition for the swap/page file
If you arent looking to get an external drive have another partition you can backup the C: partition to using an imaging program.
Of course if you lose the HDD you are sunk, but if you mess up the C: partition could restore the s/w environment from the BU partition
20Gb should be plenty for XP if its just for software