For those who are not aware, when you install Windows SharePoint Services v3 onto a machine and you use the Basic install
SharePoint will also install Microsoft SQL Server Embedded Edition (SSEE) onto your system and do so into the C: Drive! By default the location is C:\windows\sysmsi\ssee\msql.2005\mssql\data as shown below.
This means that SharePoint data and indexes (including search data) will reside on your C: drive. Thus, as the amount of SharePoint data grows the free space on you C: drive will shrink. Normally the C: is also the boot partition that holds the Windows boot files. If that drive starts to get full it will generally make your system unstable.
Unfortunately, if you use the basic install there is no way to avoid this. The best option then is to move the SharePoint databases straight after installation to a data drive. You can do this using the SQL management tools which are available via the command line (messy) or via a free downloadable GUI tool from Microsoft. You simply need to detach the databases using the SQL tools, move the files (both MDF and LDF) to another location and then reattach using the SQL tools again.
SBS2008 has exactly the same issue as, by default, the SharePoint databases live on the C: drive. The great thing about SBS 2008 is that it has a built in wizard that will move the databases (detach, move, re-attach) for you automatically. The recommendation is to always move these data files immediately after installation as SharePoint databases can grow very large, very quickly.
SQL database management is something that I cover extensively in my Windows SharePoint Operations Guide. So, if you have SharePoint installed on a system and the C: drive is running low on space check C:\windows\sysmsi\ssee\msql.2005\mssql\data to see whether the databases are filling the disk. If so then you should shift them elsewhere as they are only going to continue to grow.