The packages will go wherever you told the sim to put them at installation. If that was D:, then it will be D:. The folders will also exist on C:, but they won’t be used and will remain empty.
To illustrate, my own setup is drive C:, a 500GB SSD, and drive D:, a 1TB HD.
My sim is installed on C:. My packages are in D:\FSPackages. This contains the whole caboodle, Community and Onestore\Official.
Those folders also exist in %Appdata% as normal, but they have never been touched by the system.
Incidentally, I had an HD lying around doing nothing, so I put the rolling cache on it. That’s in E:\FSCache.
And yes, it all works very well.