You're mixing up some terminology here.
Some rules:
The drive that bios points to has to have an MBR on it.
There must be at least one partition on that drive.
That partition must have ntldr on it.
That partition does not have to have any particular drive letter at all.
The rest of the OS can be on any partition on any drive and that partition can have any drive letter assigned to it.
During setup you do not have direct control over the drive letter given to your boot drive. You only have indirect based on what partitions/drives exist. See:
http://support.microsoft.com/kb/234048
If you use setup to create a couple partitions then install onto the second one you'll have your OS on D:. Once setup is complete, just change the drive letter on C: to whatever you want.
If you want to get rid of the partition C: altogether activate D:, put an MBR on the drive if needed, copy ntldr and ntdetect over, then update boot.ini.