There's no problem with installing the actual SQL server binaries on a different drive, no...we have a test server here that has SQL installations on both drives D: and Q:, for example. However, there are some components of the installation (e.g. .NET Framework, if you're installing a version of SQL server that requires it) which always go in the system drive and can't be selected to go anywhere else, so you'll always need *some* free space on the system drive to do a SQL server installation.