If you want to add more space to your c: partition then you can use a program called Acronis Partition Manager (now called acronis disk director suite). Unlike Partition Magic, Acronis allows you to resize partitions on a server. Its not too expensive and has saved me hours of frustration.
Yyou can also delete any user profiles that aren't being used any longer
Here are several general steps we can do to free disk space.
1. Run Disk cleanup to remove temp files.
2. Disable Hibernate if it is enabled.
3. Move Paging file to another partition.
4. Disable system restore (not recommended as it is a server system)
5. Remove installed programs and install them to another partition.
Note: For all folders start with $ in c:\windows folder, they are related to updates. After deleting these folders, you will not able to remove to repair these updates.