How to turn on system restore.
Hit start>all programs>accessories>system restore. This will open a window, look for restore settings and click that. Here you can turn restore back on and yes it's a good thing to have on. It can save you a lot of work if you have a problem.
You can change the drive letter by right click on my computer>manage>disk management and then right click on the hard drive in question>change drive letter or path. Now I've only done this with drives that are empty so you could conceivably cause some problems by doing this ie. shortcuts won't work, OS can find programs but if you can get your stuff backed up...go for it! If it fails you'll have to reinstall the OS but it sounds like you may have to do that anyway so give this a shot.