Really no need to but you can.
The key is you you can't name the XP drive C until you rename C to a unused letter so that the letter C is available. You have to do this for all cases where a drive is using the letter that you want a different drive to use. Really just a little planning ahead.
What you ran into is quite normal for XP, but it has the flexibily to change it.
Re the .exe files,[or zip files] are these self extracting files, if so simply copy them to where you want them and then extrct them. basically you need to reestablish the .dll links for the programs to work.
I think that XP's file and transfer wizard can do this for you, but I have no actual experience doing it. Maybe ask in the XP forum.
My father has recently bought a P4 IE6 XP Pro (SP1), 512 DDR, new 80GB HD and his old 40GB as slave with WIN98 from old computer on it. Due to inept installation of XP pro, computer found old slave first, labelled it "C" and installed settings, etc. from slave drive. XP was loaded on new 80GB, which came out labelled as "F". Other drives are DVD-Rom (as slave)("E"), CD-RW("D") plus floppy ("A"). How would the same inept person go about renaming these so that the new 80GB is the primary "C" drive with old 40GB as "D", CD-RW as "E" and DVD-ROM as "F". All this is necessary so that when installing downloaded programs with default "C" installation, it will find the new 80GB with XP (because he can't write a path for it to go elsewhere).
Also, how would he go about importing .exe files from old drive to new? (eg. Spybot S&D 1.3, Mozilla, SunJava- mostly to avoid mass downloading over slow connection)
Help much appreciated!