To my knowledge, Google has not implemented an option to change the location of the Google Desktop index (yet), but this is a fairly simple task: Just open the registry editor (at your own risk!), and change the key

  HKEY_CURRENT_USER\Software\Google\Google Desktop\data_dir

The default location is something like

C:\Documents and Settings\username\Local Settings\Application Data\Google\Google Desktop Search

I exited GD, changed it from C: to D: and restarted GD. Then it was working fine from the new location.

For index data safety, try first to copy the index to it's new location, rename the old folder to something else, and remove the old files only when it works.