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If Steam is installed on C then the download will happen on C before unpacking and installing on another drive if you have different drives for game installs.
I"m assuming that it removes itself after installation in my C since I don't recall it using up both drives before (not really tech savy so all I can do is just make assumptions). Also one thing I forgot to add is that updates would also use up my C despite being in D. I wasn't able to see if it used both drives however.
Steam downloads the compressed game (example Bioshock) into the downloads folder in Steamapps on C: drive, creates the game folder in D: (example D:\Games\Bioshock),
unpacks it and installs the game. Upon completion the downloads folder in Steamapps will be empty. Updates will also temporarily use C if games are installed on D:
If you install Steam on C but want all your games are on D.
Create a folder on D: for example D:\Games.
Next: Steam > Settings > Downloads > Steam Library Folders > Add the folder you created and all games will now be installed in there.
I unfortunately already have that set up, and can confirm that it's still here
If you want everything on one drive copy the entire Steam folder from C:\Program Files (x86) and paste it into D:\Program Files (x86). Next create a desktop shortcut to the Steam.exe on D and run it. If Steam boots successfully from D, delete the Steam folder from C.