Diskkeeper is a great defrag prog to use when you want to defrag, but I'm inclined to blame the actual drivers and installation software this time. A lot of ppl have had problems like this and some worse ones trying to get that installed.
I also think the basic idea behind what someone mentioned earlier about putting programs on D and only your OS and related stuff on C is a good one, but I disagree somewhat with the listed division.
Files of all sorts meant to be stored, and the installers for programs you've downloaded and installed should go on D, along with programs that aren't too picky about having things like registry entries in order. Winamp is a good example of this, as even after being moved around or having just the folder with the program stuck somewhere that it was never properly installed, it can be gotten back in order with a few settings changes made within the program. Reinstalling Windows won't phase it a bit.
OTOH, a lot of other programs won't work right after Windows is reinstalled until they are also, since they rely on files and registry entries that would be overwritten. I'd say it makes a lot more sense to keep those on C, room permitting of course, since they'd be effectively lost anyway. That leaves more room on D for storing files, and wastes less room on C that's simply sitting idle and being useless.
Also. get *RID* of Norton! AVG does a better job, for free, and uses far less system resources. I've never seen it cause problems like Norton does, nor miss viruses. Updates are always free and are provided almost every day. All you do is tell it when you'd like it to check for updates and it'll quietly connect to their server, download and install the updates, and prompt you for a response if anything more needs to be done, like a reboot. Very easy, and runs like the wind on my ancient machine.
Thank you so much for the help and the advice on AVG. This Norton thing also seems very slow.