How do you move your profile folder in Windows XP?
There are many places on the Internet with instructions. I dabbled a little bit with this sort of stuff once upon a time and ended up causing myself more grief than good.
Log in as an admin and using a profile other than the one you want to copy. Go to System Properties (Ctrl-Break), Advanced tab, then click the Settings button in the User Profiles section. From there you can copy profiles and set the Default User profile (to be inherited by all new profiles).
My memory is too rusty to convey all caveats and limitations, but I have used this method extensively and it works very well. I think this should get you going down the right road. HTH.
You can use directory junctions/hard links (available in Windows since Windows 2000) to do this. There are a few gotchas you need to watch out for (especially if you move it to a new physical drive, as permissions do not always propagate across junctions like that), but it can be done - and if done carefully, it does work very nicely and totally transparently. (I use it myself, as you might have guessed.)
Basically, you need to log on under a different user account (since you can't move the one you're currently using!) and move your profile folder to it's new location, and then (from a command prompt) use this sort of command:
mklink /J C:\Documents and Settings\UserName D:\DestinationDirectory
Be sure to double check afterwards that if you browse to C:\Documents and Settings\UserName that you end up in your DestinationDirectory. Assuming you copied ALL the files (including hidden and system files) you should be all set to log back on using your original account.
Vista actually uses this same sort of thing to redirect access to "C:\Documents and Settings" to "C:\Users" (to help programs that hard-code that path, rather than using the %USERPROFILE% environment variable).
The alternative method (if you can call it that) is to re-install Windows using an unattended setup script to set the location for your user profile folder. Kind of draconian, I know, but at least that method is "officially" blessed by Microsoft.