In the old days, when users only had a single, small hard drive...it was determined that Windows requires 10-15% free space on the Windows partition to function effectively/normally.
In today's world, the size of the drive is not the important factor...it's the size of the partition on which Windows is installed...which is the key. As long as that partition is still a reasonable size (judgment call, I'd say 320GB or less), the rule re 10-15% still governs.
Users who do not break these tremendously large drives of today...down into smaller, more manageable partitions...cannot be expected to have the same rules applied. Take a 500GB Windows partition. 10% of that would be 50GB, which certainly should meet the free space requirments of Windows. To assume that Windows needs free space which is larger than the install of Windows itself...is just not logical.
IMO...the smart thing for any user to do when using a large hard drive with any Windows version...is to create various partitions on that drive. A Windows partition of 30GB or so will do fine for XP, while I might double that space (60GB or so) for Win 7. Having a Windows partition larger than that has no advantages that I can perceive...and has the disadvantage of making any system backup, chkdsk /r, or defrag operation...take much longer than it would on a smaller partition.
You can also move all data files (videos, documents, music, etc.) from the Windows partition, since they are not essential to Windows functioning. Originally, they were stored on the same partition/same drive...because that's all there was. We are long past that era in computer-time.
The only problem with these larger drives