I dont index the entire C: drive where the OS is, just certain parts. Basically heres whats indexed for me:
Internet Explorer history
Users [as in c:\users] (excludes the appdata folders)
Windows Live Mail
Windows Media Center
Those are the only items indexed on my c:. I have added 2 whole drives for indexing:
F: (user accounts, downloads, general dumping ground)
as you can see theyre not in any way connected to the OS so wouldnt affect resources quite so much.
I have also relocated the indexing database to d: which is a wd raptor 36gb drive, thereby reducing resources from c: still further.