Ok chaps, here's the setup, and I'd like your advice how to make it go as painlessly as possible, please ;)

I currently have a Foxconn 760GXK8MC motherboard, running a 40Gb Master and an 80Gb Slave drive on an IDE channel. I've purchased a 320Gb Western Digital SATA drive to replace both, and the above MoBo can mount all 3 (I think) at the same time.
Ideally, I'd like to put a clean install of Win XP on the SATA, and possibly partition it for future ease of maintainence, as it's getting a bit sluggish after a year of hard use. XP is not currently partitioned on the C:\ drice however, and I don't want to lose the software and mp3s etc on the old drive, including codecs etc... With the other drives still attached, I could always reinstall then copy across saved games etc manually I suppose, but is there an easy way to do this? (New install, old goodies?)
Secondly, I then want to set the Sata drive as the main C:\ and remove the other two and disable that IDE channel. The channel setting is I believe in the BIOS, but what do I need to do when the SATA first goes in (does it need to be set as a third slave or...?) and then when I remove the other two for the last time?

Any advice appreciated, thank you!

What you want can only be achieved by removing the two disks, installing the new one on its own, installing Windows on it, installing all the software you need on it.
After that, add the old disks back into the system and move over any data you want to keep (or better yet, burn all that data to CD or move it to a network location before you remove them so you don't have to move them back).

SATA doesn't have anything like masters and slaves, that's all handled for you. Just plug the disk on a SATA cable, add a SATA power cable, and turn on the machine.

When the SATA drive is installed by itself it should automatically be recognized as the C: drive. If it doesn't you will need to enable it in the BIOS.