There was another post similar to yours by Saral6978 just 1 post before
Seperation of data and log files is a best practice. For example, locate
your SQL binary and Windows files on drive C: and put your data file on
drive D: and put the log file of your database on drive E:
The important thing here is putting those files physically seperated disks.
A logical seperation would not gain you performance.
You can of course change your database files' folders using ALTER DATABASE
command in SQL Server 2005 as well. To learn more about this command visit
Books Online = http://www.yqcomputer.com/