I have Win98SE installed on a 640MB partition and install no programs on this partition. With only a few apps I'm up to full and need to expand the partition. I found that Outlook was storing me mail messages on this partition (C and I can't find any way to move it. It constitutes over 150MB but still. I think you will run out of space very quickly.
Not yet, but I'm fairly sure I can do it.
First off, I usually remove quite a bit of the 'optional' windows appz.
Also, I'm planning to set it up to use the mail & contacts databases on my desktop, so that should ease it up as well