>Thanks, John. Quick question: if I partition the 2.5GB drive into say a Bootable (1GB) for the OS (NTFS), a 500MB swap partition (FAT), and the rest for misc (NTFS), does this sound right? I'd use the entire 7GB drive for data and app installations (NTFS). Or should I put the swap partition on the other drive from the OS?

I'd say you are on track. Use the first drive for the OS and FAT. Put the data on the other drive.