Install on second partiton within XP

Hi, I'm installing RC-1 to dual-boot with XP Home. I've got my partitions as
I want and have selected my 20GB y: partition in the installer (which is
running from inside XP emulated - no DVD burner here). However, I notice
that during
"copying windows files", files (namely '$WINDOWS.~BT') are actually added to
my main 80GB c: partition.

I want to know if this is normal, had installation got the partition right
and is just using c: for storage - or will it go ahead and install on c:
rather than y:.

Thanks for your help.