Liveupdate is designed in such a way that it goes to the C drive , you cannot move this to a diffrent drive.
Not only symantec If you have any other software installed and that downloads defntion or upadtes on a daily basis will be on the C Drive.
Refer to the above kb for your second question, it has been answered there.
Extracts from the Kb
"When LiveUpdate is installed, the value of the maximum cache size is generated randomly. Usually it is between 150 and 190 MB. Sometimes it can be more than 800 MB. The maximum cache size limits the size of the download folder. Once the limit exceeds, files will be deleted. The deletion is random, regardless to size, age, or other parameters of the files. "
Also if you want these zip files can be deleted from the download folder , there is no harm in it