All remotely recent NT-based Windows OSes (I don’t know about actual NT3 and NT4; but certainly anything you actually care about) support mounting a volume either as a drive letter or under an empty directory on an existing NTFS filesystem.
Doing the surgery from within the OS you are trying to modify can be difficult(trivial if you want to create a new folder, or graft a giant disk under an empty ‘my videos’ folder or something like that); because c:\users and c:\windows, and any of its subdirectories, are not going to be empty and will not take kindly to any attempt to copy, delete, mount, and paste while in use. File locks all over the place, new files being created, the works.
If you can arrange to operate on the OS from a different boot volume, things get easier. Unfortunately, while Linux liveCDs are the obvious choice, they are unlikely to be able to do the ‘mount NTFS volume under directory on other NTFS volume’ trickery. Linux can read/write, even create/resize NTFS these days; but there are limits. You’ll probably have to work from another Windows instance (either just a quick minimal install on another disk, or a fairly full-featured WinPE boot). It definitely isn’t something that the installer makes easy, which is a pity, because all the technology is there, they just need to let you specify the disk layout in slightly more detail before the filesystem is populated…
(This is actually sort of a habit at MS. Their technology is often better than they are given credit for; but they are amazing at totally failing to slap a halfway-usable interface on it and send it out to please users. Same thing with ‘Volume Shadow Copy’ vs. ‘Time Machine’: ‘Volume Shadow Copy’ was the sophisticated, powerful, versioning system built into recent Windows OSes at least as long as OSX has been alive, while ‘Time Machine’ is kind of a nasty hack on top of the somewhat long-in-the-tooth HFS+; but all that barely matters, because one of the two is actually available for even dubiously clueful users to use, and the other is pretty much “Ask your IT Department, or be part of the IT department”.)
