First, what a surprise that HP is so helpful!
Yes, it would probably be the best thing to do to back up all your data. You might be able to move it all over to your D:\ drive, if you have enough space there, then restore your computer to its original state. If the worst comes to the worst, reinstall Windows. XP is pretty good for this, and you will have the advantage of starting off really clean. It's a hassle to reinstall all your programs, but at least you can set it up the way you really like.
If you do decide to go this route, and if you have a CD or DVD drive, it may be a good idea to make an image of your drive: with WinXP set up, all your drivers working, internet running, and all the current Windows updates installed, and having deleted all the stuff that you don't want (e.g trials for software or internet access and so on). That CD or DVD should be a bootable one. You can do this with good imaging software. Later, what I have done is then to install all my basic, absolutely essential programs and utilities. It goes without saying, of course, that you will have WinRescue installed also. (No, I get no commission for saying this. Ray doesn't even know me.) Then I image that, also on a bootable DVD. Now, if ever the worst case scenario occurs, and even WinRescue can't get me out of the hole, I can restore my computer to a basic, clean functional structure without loosing many hours of work.
One thing that I like to do is set up my system so at all my data -- my documents, my client files, email messages, photos, and so on all go onto a drive which I keep exclusively
for data. That makes backing up all the really important stuff easier: my data drive. If you want to do that, then perhaps your D:\ drive could be used. I use the C:\ drive for Windows and all my installed programs. Once your C:\ drive is all OK, you can delete anything from the D:\ drive that doesn't need to be there, and use it for your data.
I leave the My Documents folder on the boot drive (the C:\ drive), because so many programs default to there for all sorts of things. But I have a "My Documents" folder on my D:\ drive. In the C:\ My Documents folder, I have a shortcut to the D:\ My Documents, and other shortcuts to some of the other data folders that I use frequently, for example : Clients, Projects, Photos, Family, etc.
However, that may be unduly complicated. In addition, there is some data that programs put on the C:\ drive, usually without telling you. For instance, many programs put critical information in C:\My Computer\Documents and Settings\User\Application Data. Others put a sub-folder into their own Program Files Folder with important information there too. So you might miss that in a backup process.
But I feel that as long as I have my own data well backed-up, in case of a crash, if WinRescue doesn't get me back on track, oh well...I do have my data, and I do have the images to fall back on.
I hope it gets sorted out OK.