With Windows 7’s release just around the corner, now’s a great time to get your PC ready for the new operating system. First step: separate your data onto a dedicated partition.

The Newbie’s Primer: What’s a Partition?

A partition is what looks like a separate disk in your computer, with its very own letter—like a D: or E: drive alongside your C: drive. In reality a partition can either be a subset of an existing hard drive (virtual) or an actual separate physical drive.

A virtual partition is a slice of an existing drive. That means if you’ve got one physical hard drive, you can partition it into a C: drive and a D: drive. In Windows Explorer, those will look and act just like separate disks, even though it’s actually one hard drive.

A physical partition is a whole other hard drive that gets its own letter when you add it to your computer.

The Benefits of a Standalone Data Partition

By default, Windows stores your data in a user-specific directory–C:Documents and SettingsginaMy Documents in XP, C:UsersginaDocuments in Vista, etc. However, for the power user, there are benefits to dedicating a single drive letter to your precious data.

Fresh operating system installations are easier. Whether you’re doing a fresh installation of Windows 7 or formating your hard drive to reinstall Windows XP from scratch, a separate data partition comes in handy. With your data stored on partition other than C:, nuking your Windows drive is much easier because you don’t have to delete and copy back your files. You never have to touch your data partition—it’s there and ready to use when Windows is.

Accessing data from multi-booting operating systems is easier. If you’re both curious but apprehensive about upgrading to Windows 7, you can have your operating system cake and eat it too by dual (or triple) booting your system. If you do decide to dual boot Windows 7 alongside your existing Vista or XP system, a standalone data drive will serve you well: both OSes can access your files in their dedicated location, without one having to navigate through the other’s default folder hierarchy.

Separate hard drives reduce the risk of total failure. If your data partition is a separate physical drive, you’ve got redundancy that reduces the risk of total PC failure. If your C: drive fails, you can pull your data drive out, stick it in an drive enclosure or install it in another PC, and go. If your data partition fails, you’ve still got a working PC: you can just restore a data backup without having to reinstall Windows. With a separate partition for your data, it’s just easier to image, back up, or transfer your important files, photos, videos, and tunes.

You might get better performance. While I haven’t tested this or seen official confirmation from Microsoft on it, at least a couple of savvy Lifehacker readers say that a separate physical partition can boost your PC’s performance, because Windows has another place to store virtual memory and paging information.

The Pitfalls and Gotchas of a Standalone Data Partition

While neat freaks will love the clean separation of their data and operating system with a standalone partition, there are a few things to keep in mind.

You’ve got to switch where all your applications save their documents. It’s not difficult to tell Windows you’ve relocated your “My Documents” folder, but with a separate data partition you do have to do just that. (In all versions of Windows, it’s a matter of right-clicking on your My Documents icon and setting the path in the Properties dialog). Even if you do that, some older software might not get the memo. Reader pdok said:

I’ll confess a little separation anxiety here. I used to do this partition scheme, but finally gave in to the standard “My Documents” hierarchy because there are so many stupid programs that don’t check where the user file store is. I was constantly redirecting default file saves to my separate partition, and eventually I just gave it up since it ended up not saving me time. Yes, I know you can define different locations for My Docs, but I found even Microsoft programs that were too unsophisticated to handle a non C-Drive default location.

For example, here’s how to tell Dropbox to use a different syncing folder.

You’ve got to manually export some types of user data that programs keep within their Application Data folder, like browser bookmarks, Outlook’s PST file, Firefox’s profiles, and address book contacts. There are two types of user data on your system: the files you explicitly create and save, and the data you implicitly create and save, like software profiles and contact lists. Your separate data partition won’t have the implicit stuff unless you manually export ‘em or do things like back up your Firefox profile.

Size matters. (And so do good backups.) When you create your data partition, make sure you give both your operating system and your documents folder as much room as they need. While you can resize partitions after you’ve created them, it’s not as easy on older versions of Windows and can nuke your whole drive if something goes wrong. So size does matter: make the right decision up front. Along those same lines, a separate partition for your data doesn’t mean you still don’t need to do thorough, regular, and preferably automated data backups.

You can’t store application installations on your data partition. Because installing a Windows application makes registry changes and plants various DLL’s around your system, I don’t recommend installing apps anywhere other than your C: drive with Windows. The best way to back up and separate your software is to keep the original installation disks. A separate data partition doesn’t include program installation files. In fact, reader Brian Sexton reminds us:

Software activation for applications such as Flash, Fireworks, and Dreamweaver and media authorization for such things as iTunes purchases are tied up with the system and its registry or at least hidden files, not just the obvious applications and data, so even if most of your data is safely stored on a separate drive or at least completely backed up to another drive or removable media, you still might have to deal with reactivation and reauthorization hassles even if you are using the same exact system after the crash, just with a new hard drive.

How to Set Up Your Data Partition

Still game? Here’s the quick rundown on how to get your dedicated data drive going.

Add another physical hard drive to your PC. For true separation of operating system and your data, you want to crack open your PC’s case and install a new hard drive. Once your new drive’s got its own letter and is formatted and ready for use, it’s a matter of moving your data over to it.

Partition the free space on your existing drive. If you want to split your existing hard drive into separate partitions for your OS(es) and data, you need a repartitioning tool. Windows Vista comes with one installed by default; here’s a step by step on how to repartition your drive in Vista. If you’re using Windows XP, you want to try a free tool like GParted. Adam walks you through how in step 1 of his article on how to dual boot Windows 7 with XP or Vista.

Once your data partition has a letter and data on it, tell Windows you relocated your My Documents folder and you’re good to go. (For the extra anal, here’s how you can further organize your data partition).

You a believer in a separate data partition? Any tips for living the multi-disk computer life? Post ‘em up in the comments.

Gina Trapani, Lifehacker’s founding editor, has been separating her data and operating system for years now. Her weekly feature, Smarterware, appears every Wednesday on Lifehacker. Subscribe to the Smarterware tag feed to get new installments in your newsreader.