Yeah, OP, you can do that. For nearly two decades I've split OS and data across two drives, so I can reformat/replace the OS drive and keep data intact. In the past I simply moved My Documents to the second HDD, made sure the Outlook PST was in there as well (it used to be in AppData), and could then rejig the OS drive anytime.
Used to have an SSD for OS and 3 x 2TB drives for data and backups. Media are on a separate server.
Now I use two SSDs in my desktop rig.
I've migrated all data to the cloud so only placeholders are local, plus a few hundred frequently-used files. I do keep an offline backup just in case the cloud evaporates or the internet crashes permanently.
Now one SSD is primary active for OSs. And the second SSD is for OS backup images and ad hoc transient files like video capture/editing, etc. With Acronis I can restore any OS image to any system or VM.