Sriram,
First, create a folder hierarchy on D for your web data. Then, right click the wwwroot folder (or whatever you call it), goto properties, and then security. Add "Network service" to the list. Click OK, OK again. The directory is now set.
Step two is point IIS at this directory. So, goto Start>run>inetmgr to pull up IIS Manager, right click the default website, properties, home directory, and change the path. :)
--Brian Desmond
Windows Server MVP - Directory Services
http://www.briandesmond.com