Your C drive doesn't currently have enough space to do a full installation on the internal HD in full. You can do the Option 2 split installation and install the main program to the C drive and then install the rest of the content to your D drive where you mentioned your other RealTracks and Drums already are. You can also install everything to the D drive. Or, you could run everything from the external HD that's supplied to you. In all honesty, I've not seen an issue with speed running solely from my external HD, so that's how I've always operated my personal copy of the program. Also I personally prefer everything on a single drive and not split, as every once in a blue moon Band-in-a-Box will need the paths reset up sometimes do to a Windows update or something that knocks it out. Doesn't happen often, but it has happened before, and if that does happen it's super quick to re-set those paths in the program and rebuild! Having it all on one drive and pulling from there solely is my personal preferred method.

Cheers,
Ember