Unfortunately, the drive letter is embedded in an image ... so an image/restore won't work.
It IS possible to change the system letter, but it's not recommended (too many potential issues if you miss anything in the registry).
The best path here is to simply re-install the OS. Before you do so, disconnect your other drives and any USB card readers you may have in the system. Then install the OS to your new drive -- when the XP installation CD shows the current partitions on the drive, delete them all; then create a new partition for the install (this should show as C:) & do the installation. After it's done, simply reconnect the other drives ... you can easily change those drive letters to whatever you'd like with Disk Management [the system drive is the only one you can't change through the management plugin].