Hi Dave, by program folder do you mean thats the folder that your programs were installed to on your XP drive, not a folder that you stored programs in before you installed them ?
If so you cant install them from there as you wont have the setup file, nor can you run them from there as your registery will have altered so it wont put the correct files with the correct program
So lets see if we can get things done properly
Set your XP drive as a single master for now, you can add the slave drive later if you are just goinng to run XP as the single OS on your pc.
At the part where XP asks you where you want to install it to, after booting from the CD, it gives you an option to select the partion or delete a partition.
Select delete C.
If you want to wipe all the drive you can delete E as well at this point.
It will then give you the option to create a partition to install XP to and allow you to set the size that you want it to be in MBs.
The next step is to format it, if you are not using ME any more you may as well select the NTFS option.
After its formatted the drive it will start the new installation like it did the first time you did it.
After its completed, activate it and install your AV and firewall and get the updates.
Once you have done all that go to Start/Admin Tools/Computer Management/Disk Manager and that will allow you to format and allocate the remaining partition on your drive.
Then add your slave drive, remembering to set the jumpers correctly on your master and slave, some drives have a diferent setting for a single master or a master with a slave.
I hope thats explained it simply enough, sorry its a longish post but I hope I have covered everything for you, get back to me if its not clear enough on any point