Extending C drive onto unallocated space?

You cannot extend the System partition on a server natively using the Windows tools. All you can do is manually move programs and/or files that don't absolutely have to be on that partition to another volume. In some cases, of course, this could mean uninstalling and reinstalling programs, so it's not a thing done lightly. In your case, although you only have 3% of your C: drive free, this does constitute over 1GB of space.  If you can't increase this by moving things, then at the very least you will need to monitor it closely to make sure it doesn't fall below 1GB.

That said, there are some 3rd party tools that you can use to add space to basic partitions, although I don't think this includes space that is on a separate volume.  You could check out the specs on some of these. One I've used is Acronis:

http://www.acronis.com/enterprise/products/diskdirector/

WHY do you have a HUGE C: drive - 40 GB is HUGE!!!!

I would strongly recommend you find out WHY you have a FILLED 40 GB C: drive (none of my servers that I manage have drives larger than 20 GB).  Find out what it taking up the space and move it.  Move it to the mirror - No data belongs on the C: drive.  The only thing that belongs on the C: drive is the OS and application binaries.  

How to reorganize and what to reorganize can be found here:
http://www.lwcomputing.com/tips/static/bootdrivesize.asp

"... I have another disk installed as a RAID 1 mirror which has no data on it ..."  ==>  Disk 1 is NOT a "RAID 1 mirror" ... if it was a mirror, you wouldn't see it in disk management.

It IS, however, another disk with a lot of free space, and while you can't expand C: onto this disk, there are some simple ways to expand C: if that's what you want to do.    Note, however, that the comments r.e. C: already being large enough are correct -- restructuring your data to free up some space on C: is a good alternative to expanding C:

But if you DO want to expand C:, here's how ...

==>  First, you must have free space after the C: partition to expand it.     Your drive currently looks like this (ignoring the tiny 39MB first partition):

CCCCCCCCCCCCDDDDDDDDDDDDDDDDDDDDDDDDDDDDDD

What you need is this:

CCCCCCCCCCCC........DDDDDDDDDDDDDDDDDDDDDDDDDD
where the ...'s are free space.

You can accomplish this by ReSizing the D: partition, which will result in this:
CCCCCCCCCCCCDDDDDDDDDDDDDDDDDDDDDDDDD...........
and then "Sliding" the D: partition, so you have this:
CCCCCCCCCCCC........DDDDDDDDDDDDDDDDDDDDDDDDDD
... and then you simply ReSize C:, which results in this:
CCCCCCCCCCCCCCCCDDDDDDDDDDDDDDDDDDDDDDDDDD

Another alternative would be to create a new partition on your 2nd drive (Disk 1) and simply move all of the data from D: to that new partition, and then delete D:
This would make Disk 0 look like this:
CCCCCCCCCCCC...................................................................
and you could simply expand C: to whatever size you want (up to the entire drive)

These restructuring operations can easily be done with Boot-It NG ... see my comments in this thread for details:  http://www.experts-exchange.com/Storage/Misc/Q_21929035.html#17165533
... and note the pictorial in the same thread here:  http://www.experts-exchange.com/Storage/Misc/Q_21929035.html#17169507

You can download Boot-It here:  http://www.terabyteunlimited.com/bootit-next-generation.htm

The free demo will do what you need, although it's well worth buying a copy of this very handy utility.

To use it, just run MakeDisk to create a bootable floppy or CD;   boot to Boot-It;  select CANCEL at the first prompt; then OK.    Then click on Partition Work ... and do the partition adjustments noted in the links above.

To quote the link I posted before HyperCat:
Windows Pagefile
The Windows Pagefile is the file that contains your virtual memory. On a server, this file should be equal to 1.5-3x the amount of RAM in the system, However, the maximum size of the pagefile is a hair under 4 GB, so even if you have 4 GB of RAM or more, the pagefile on the C: drive will not be over 3.99 GB or so. You can have separate pagefiles on different logical and/or physical drives (it's best to have one on a separate set of disk spindles for the best possible performance). Windows by default puts the pagefile in the root of the C: drive with an initial size of 1.5x RAM. If the average server has 2 GB of RAM installed, then the pagefile is using 3 GB of RAM - on a 12 GB boot drive, that's 25% of your total space.

Fortunately, the pagefile CAN, and in my opinion SHOULD be moved to another logical drive (again, if available, another physical disk or RAID volume). Instructions on how to move and better still, optimize your pagefile settings can be found in Daniel Petri's article, How can I optimize the Windows 2000/XP/2003 virtual memory (Pagefile)?

Is there any problem with moving the pagefile off the boot drive? In general, no. Technically, yes. When a stop error occurs (BSOD - Blue Screen of Death), Windows dumps the contents of RAM to the hard disk so that, in theory, you can debug what happened and correct the problem. In reality, the high-level skills required to do such a thing are not common place and since I started working professionally in IT in 1994, I have not once used these dumped files or been asked to supply one for troubleshooting (by Microsoft of anyone else). Indeed, if you have a reproducable problem, you can always reconfigure appropriately so that you can create this file and debug things. So in short - move your pagefile, leaving a 2 MB file on the C: drive to allow "minidumps" - which I have used to get a clue as to what went wrong and are typically only 64K in size.

Techno-Man-uk,

You are getting too much, very good advice, but it is not coming in a structured way thus you may be feeling overwhelmed. Please listen to one person, anyone of the above, they all know what they are talking about. To help you put some order in it, I will try to lay out the steps of what you should do:

1. First....notice in the snapshot you posted above that you have 2 physical drives: disk 0 and Disk1. Notice also that all of Disk1 has over it a black bar and it says 136.12GB Unallocated (this means that you are not using it - thus you do not have Raid). This unallocated space must be partitioned and formated so you can use it.

2. Second: Right click on the white space next on the Drive1 and select Create a new partition. It will ask you for the size and ask you if you want to assign a drive letter to it (I am doing this by memory so the wording might vary but you get the point). Next you will need to format it. Go ahead and format it (Quick format will be fine).

3. Third: You will now see a blue bar over disk1 and it should say something like 136.12GB and under it Healthy......

4. Fourth: Rename Disk1 by right clicking on it and call it DATA....this is just to keep things tidy...it is not really necessary.

5. Fifth: Copy/Move all the Data that is currently stored either Disk0 to Disk1. You will need to recreate the Shares just like you had them on Disk0. You should leave all the programs where they are (do not mess with the programs at this time).

6.Sixth: Once the files have been moved or copied from Disk0 to Disk1 and the shares and permissions assigned you can proceed to delete them from Disk0 (in case you copied and didn't just move them which would be the better choice).

7. Seventh: Now it's time to move the page file. To do this right click on "My Computer" and select properties. Go to the "Advanced Tab". Under "Performance", Click "Settings" and then "Advanced". Under "Virtual Memory" click on "Change". You will see that your pagefile is located currently on your logical drive D. You want to change this to whatever logical drive letter you assigned previously to your Disk1. Make sure that you select a size 1.5 times the amount of RAM that you currently have installed so if you have for example 2GB or RAM, you will make the page file 3GB....(You can tweak this later to a better size - I don't want to confuse you more at this time).

8.  Eight: Once your data and your page file are located on Disk1 you will want to see what is on your logical drive D...(the partition called New Volume). If it is data, repeat the step 5 above. If it has something you are not sure about....leave it alone.

9. Now run my first suggestion at the begining of this thread: from the command prompt type cleanmgr.exe. You can select everything except the option to "compress files" and the option to "Catalog Files for the Content Indexer". You can also select the "More Options Tab" and remove previous versions of your System Restore. It will not delete the latest. Click CleanUP  and confirm when asked. Return to the Disk Cleanup Tab and click on ok.

10. By this time you should have recovered a TON of space. And you should be able to proceed with the other recommendations above to resize the logical drive C partition.

All the above advise is basically saying the same but if you do not follow this in order you can do more harm than help.

Once you do all the above.... touch base here again (or if you get stuck at any of the steps) and we will be here to give you more advise on software to use to resize partitions, optimal sizes, pagefile advise, etc.....

Hope it helps.... Just make sure that you stay on track with one persons advice or you might mess it up.....

Just in case someone decides to disagree with me for sayng they are the same thing (I always struggle with wording since english is my second language)... technically there is something called "Swap prefetch"

By Wikipedia definition: A few operating systems use anticipatory paging, also called swap prefetch. These operating systems periodically attempt to guess which pages will soon be needed, and start loading them into RAM. There are various heuristics in use, such as "if a program references one virtual address which causes a page fault, perhaps the next few pages' worth of virtual address space will soon be used" and "if one big program just finished execution, leaving lots of free RAM, perhaps the user will return to using some of the programs that were recently paged out".

"... copy the D: partition to second HDD and delete it from first drive.    Then extend C: to entire HDD if you want. "  ==>   Agree ... that's exactly what I suggested above in post #25408537  

"... Another alternative would be to create a new partition on your 2nd drive (Disk 1) and simply move all of the data from D: to that new partition, and then delete D:
This would make Disk 0 look like this:
CCCCCCCCCCCC...................................................................
and you could simply expand C: to whatever size you want (up to the entire drive)