You put your C and E there yes! Then run the make-iso-win.bat script, and burn the generated iso to CD. Boot with new HDD on primary master and type xboxhd. The rest should be easy...
You can also include your eeprom.bin on the CD and have it calculate the hdd password for the new HDD (get version 1.3). Then choose the option to make a floppy with locking/unlocking tools and lock the new HDD for your xbox.
Easiest way to upgrade a hdd in my opinion - you actually dont have to remove the old hdd from the xbox before the new one is ready for action