Motherboards have either 1 (really old), 2, or 4 IDE chains. On each IDE chain their can be either no devices, 1 master, or a master and a slave. Chains can be disabled in the BIOS. The more chains enabled the more IRQs wasted (Hey, I'm a SCSI person... I have to put in some pokes at IDE.

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Since an IDE chain can only access one device at a time you want to layout your system to work around this as best as possible.
If you have 1 hard drive and a CD-ROM drive and 2 IDE chains on your motherboard one would want to put each device on its on chain and have both set to master.
If you have 2 hard drives and 1 CD-ROM drive it depends on how you use your system. Are you more likely to be copying between hard drives or between the CD-ROM drive and one of the hard drives? Which one? Put the devices that are most likely going to be accessed at the same time on seperate chains.
For example if most of what you do is play games that use the CD-ROM drive and are installed on drive 2, put those two devices on seperate chains. In this case one would have Hard Drive 1 and 2 on the same chain, one set master and the other slave. I typically put the master at the end of the cable mainly for historical reasons (on really old motherboards one HAD to do it that way.) On the other chain one would have the CD-ROM drive set to master.
Hard drives do use a lot of power. This paragraphing is me babling and theorizing, skip it if you want. I can understand the arguement to put them on different cables if possible. When drives spin up it can cause a voltage drop and when they spin down a spike. Having them on seperate cables might minimize the effects on each other. I haven't heard of anyone hooking up a voltage analyzer up to one of these cables and monitoring the different affects. I have not heard of anyone having problems with 7200RPM drives or slower on the same cable. I have heard of people having problems with 10K and 15K drives on the same cable with weaker power supplies. Since the faster drives sometimes have noticable problems, that might indicate that the slower drives might be having problems we don't notice or we may hurt their lifespan when we put them on the same cable. Drawing the voltage in parallel instead of in series is probably better if possible. I'm not that great at the Physics involved. Do Kirchhoff's loop rules apply? His rules apply to closed circuits which I'm not sure this is? If his rules do apply then the voltage drop is spread accross all loops. If the hard drives are in series then the full voltage drop is experienced by the second drive in the series, correct? Any physicist or EEs here?
Are you are asking about if you have one connector can you plug in both drives into it? One can purchase power cable splitters if your power supply does not have enough connectors.
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1) Do I need to set the drives up in that relationship? >>
No. See above.
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2) Can I have two master drives? >>
If they are on seperate chains.
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3) Would I want two master drives or would I want a master and a slave drive setup? Why? >>
See above, it depends on what you are doing.
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5) I also have a CD-RW drive and a 3.5" drive. Does the CD-RW need to be a master or slave drive in relation to another drive? >>
By 3.5" drive what do you mean? Most hard drives are 3.5" wide, so our floppies. Floppy drives have their own cable and connection to motherboards.
As far as your CD-RW drive, see above. If you have a CD and a CD-RW drive and want to be able to copy CDs between the two with out having to copy it onto the hard drive first you will need the CD and the CD-RW to be on seperate chains. Otherwise you will burn a lot of coasters. Again, burning from hard drive even the hard drive and the CD-RW should be on seperate chains, but this is not as critical. On most IDE systems no matter how powerful if you try and use it while burning directly from CD you can't use it. You can, but your chances of burning a coaster go through the roof. On a decent system you should be able to use your system while burning from hard drive. On a n a decent all SCSI system you can burn however you like and use it at the same time without burning coasters.
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4) Will I need to re-configure the jumpers on these hard drives for my particular setup. >>
Most likely. If you don't have the manuals for the drives you should be able to get the jumper layouts from the manufacturers website. A lot of drives these days have the layouts printed on the top or bottom, or in the case of SCSI IDs right above the jumpers.