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I have two physical disks on my system. Is there any "optimal" location for the program folder w.r.t. the working folder, the proxy folder and the final destination folder?

I would have to say 'probably not' if there is plenty of room on whatever disc you have the working and proxy file folder. And depending on how powerful your CPU is, that could all be on the C:\ drive. Remember that there are probably a lot of users out there who might only have one hard drive. But if we are talking optimal, I try to keep my program files on one hard drive (which in my case is not the OS system drive -- I have 6 internal hard drives) and my working folder on another hard drive which has tons of space. Whatever the case I am just trying to keep the amount of thrashing by hard drives seeking programs and files to a relative minimum...

When it comes to video editing I don't think there is any "optimal", "best", or any other kind of "rules", only personal preference and what works for you and your system.

With that said, when I load a program I always put it in the default location. As for the VS working folder, I have an external hard drive that I've named V: (for video). Each project has its own sub-folder: Christmas, Vacation, Baseball Season, etc. When I am working on the Baseball video any and all files related to it go into that particular Baseball folder, including the captured video clips, any titles I make with Xara3D, any backgrounds I make with Digital Juice, any sound clips I might rip from CDs. (Of course you could also make sub-folders for these if you like.) When I finally render my project to a DVD-compliant MPEG-2 that also goes in the folder. When I burn to DVD Folders I choose to burn to the Baseball folder and the Video_TS folder is automatically placed there. When I make my disc label and case insert I save the files to the Baseball folder.

I use Nero to burn instead of VS because many times I am burning multiple copies, sometimes not all at once. If I used VS I would have to go thru the render process all over again. When I use Nero I simply navigate to the Baseball folder and open the Video_TS folder and choose the files. They are already rendered so all that takes place is the actual burning.

I do it this way for housekeeping reasons: If I need to go back and re-edit something everything is in one place, and then when I am finally done I can simply delete the folder if I wish to do so. (Although I usually don't. I do delete all the individual files but keep the final rendered MPEG-2 and the burned project in the project folder.)

Again, this is personal preference and I'm sure you will get other opinions on what is "optimal".