Hi nevinmann. I'm thinking that your problem is the multiple location for user/program data files. There is a tutorial posted by which one can move the Program Data directory, but there have been some problems reported. I'm not sure what percentage of success exists. I think it safe to move any of the User profile folders, but Program Data seems to be problematic.
I'm also guessing that you have changed permissions on some of the system folders/files in addition to relocating and that this has somehow confused Win Search (and may be exhibiting other odd behaviors as well).
I personally would reinstall at this point, but if you wanted to try another option:
after enabling and creating a System Restore point (or, better yet, image the C:\ & D:\ partitions), I would rename or move the entire Search folder in C:\Docs & settings...\, delete the Windows.edb file in D:\Program Data\Microsoft\Search, point the index location to D:\Program Data\Microsoft\Search, restart the machine and see what happens.
All this said, again, I think your best bet is to format C:\ and do a clean install, keeping Program Data in its default location (not forgetting to delete the appropriate folders on D:\. )
It may be a bit of work to set everything back up, but it will pay off in performance and reliability of the system (not just for Search).
No problem at all if you desire to move user profiles and folders, and there are some sure-fire methods of doing this in the tutorial section (just click on 'U' in the Tut index and scroll down to the User tuts). But my recommendation is to leave Program Data/Program Files in their default locations.
Maybe the above (green) option will work. If not (and if there are no othere issues), you may be satisifed using a 3rd party search engine. But I have a feeling that there are other issues related to this as well.
Appreciate the information provided, and do post back to let us know what you did, how it went, or if you need to bandy about more ideas.
James