Ok,,, RAM doesn't have anything to do with Free Space in general.
But, the page file size will take up free space as it grows.
The system can initially start out with a page file that is the initial size set under (don't know if this is exact path at the moment) Computer / Properties / Advanced Computer settings / Advanced / Performance / Advanced / Virtual Memory
If it starts off at the initial size, as it needs more it will grow to the max size, if you don't allow for space, you will have problems.
If you don't allow for expansion if you ever do add ram,, you will have problems.
You could set the Page File Static (Initial and Max being the same as the Max size), this could be debated as well, if it is a good idea or not. I personally don't see much issue with it and is supposed to prevent fragmentation which can also be debated.
It is a good idea to set the RegKey to delete and rebuild the page file every so often on reboot. Set the reg key, reboot and then unset the key. Search Bing for the key "delete page file on boot". This will cause the system to take a bit longer to shutdown and reboot, but it creates a fresh page file. Essentially defraging it. which is needed and a good thing.
Free Space is used by Defrag, and I think other system specific things as scratch space. It is not taken away, but used as a temp scratch space. This is not a wholly accurate description (other than the defrag statement), but something to that effect. It is the best way I can describe that free space is critical to a properly working Windows OS. and here it comes, (Linux and Mac don't have this problem). I said it for all those who read this so you don't have to. Then go use those, go away, have a nice day.
The page file size calculations could be explained by others better than I can. More technically anyway.
It's not an arbitrary number. I just know it is 1.5 x installed ram Initial and 3 x for Max. And rounding to the actual size of memory sticks installed, not what is reported by windows. 1024 for 1G etc.
I would recommend getting an external 1TB HDD and backup to it. If something happens (and it will) to the one hdd, it won't matter that it has multiple partitions, it will all be gone, period.
In the olden XP days,,, carving up a drive, was a good idea, and advocated it all the time.
In these Modern Times of large cheap drives and Windows Vista/7 and how data is handled differently.
I don't advocate carving up drives as a normal process. Yes, it can be done. But it is more for specific reasons other than what is being discussed here.... Mainly Dual/Triple booting OS's.
Otherwise, get an exteranl drive larger than your internal system drive and run regular backups. and don't carve up the drive. You really aren't gaining much.
However,,,,,,,, yes, you can keep data on one partition and OS on the other and if something happens to the OS (which my experience is rare for Vista/7) , you can just backup a few things and reload windows. Yes, this is possible. but again, It's not really doing much more than that