Hi jsned1,
I am not from Laminar Research; just a flight simmer from downunder.
X-Plane 10 or X-Plane 11 is unlike any other shoot-em-up games or flight sim packages whereby their files are spread over a particular location and through your operating system files.
X-Plane 11 has been designed so that it installs into a dedicated directory either on the desktop, your C:\... drive or a dedicated directory of your choice.
Having said all of the above, you will be splitting your files and I am of the opinion it won't work at all. The files will not be in the one directory as X-Plane is designed. This is one of the benefits of X-Plane as you can very quickly move the "whole x-plane directory" from one computer to another without having to perform a reinstall process. .
My system is designed and set up so that I have my SSD C:\... drive, of smallest capacity (125 Gb), setup for my operating system and other necessary files, another dedicated SSD drive just for X-Plane 10 (250 Gb), another SSD drive for X-Plane 11 (500Gb) and a 2TB Hard drive as my Hangar drive with all of my X-Plane drives and other stuff backed up in the event of a crash.
Laminar Research recommends X-Plane be installed on the desktop. However you are not compelled to do so. The recommendation is there so that some flight simmers have an easy access to the X-Plane directory instead of trying to find out where the files are installed. Serious flight simmers diverge away from the LR recommendation and install onto a dedicated drive.
In asking your question you hinted that your E:\ drive is sufficient capacity to enable X-Plane to be installed on that drive. The files you plan to place on the E:\ drive already consume the greatest capacity of your X-Plane installation.
I would suggest the following:-
1. Install your operating system and other necessary files on your C:\ drive; and
2. Install X-Plane onto your E;\ drive. If you already have files on that drive make sure you have a dedicated directory just for X-Plane.
In short, what I am saying is don't split your X-Plane files away from the standalone X-Plane directory. If not convinced of my advice then try your proposal. Make sure you have a good backup strategy.
Good luck
Glenn