XP will take as much as 800-900 MB, so 1.5 GB should be enough considering any future updates.
The big disadvantage is that the temporary folder for burning disks will be on the same partition. DVD burning takes 4 GB easily. Now, wait until blue ray DVDs come out. Probably 20 GB will be needed. No, this temporary folder doesn't appear to be movable, as much as I already tried. Not all CD/DVD burning software uses temporary folders, but many do.
It does seem like a nice idea at first, but the limitations are not obvious right away.
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