Partitions and merging with new HDD installation

Hi, I'm posting this on behalf of my father-in-law. He has a Toshiba laptop running Vista Home Premium 32bit with a 40GB HDD. We've bought him an upgraded 500GB HDD and have used Macrium Reflect to clone the HDD. This worked a treat and popped the new HDD in and all done, however, I'm having a bit of a problem with the partitions.

The original HDD had 2 HDD's showing for some reason (I don't he would have done this) ...

Vista(C) Total size 37.2GB with 1.68GB free space
Data(E) Total size 37.2GB with 37.1GB free space

When I popped in the new HDD, the C drive was still the same "Total size" and the rest was showing as 'unallocated' in the Vista Disk Management tool, so with this I created an NTFS volume (D) and then used EaseUS Partition Master Free Edition to merge this with the E drive (I couldn't merge with the C drive).

I now have :
Vista(C) Total size 37.2GB with 1.68GB free space
Data(E) Total size 427GB with 426GB free space

What is the C and E drive and why are they separate?! and why can't I merged these together into 1 partition?! Is it separate for a specific reason?

Any help would be really appreciated. I'm primarily an OSX guy, but have quite a few years of Windows OS knowledge, so not a real newbie...

Cheers

You can merge C: and D: into a single partition using one of several partition managers:

Paragon Partition Manager Free Edition - Leading partitioning software! | PARAGON Software Group - free partition software, resize partition
GParted -- A free application for graphically managing disk device partitions