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Have your daughter create a folder on the larger of the two HD's (in your case, where you've installed OS9) and give it an appropriate name (such as "Movie Projects", but whatever).
Next, move the iMovie folder from her home directory (/Users/her name/Movies/iMovie) to the new folder you've created *.
When opening or saving a movie project in iMovie, navigate to this folder instead of the movies folder on the OSX drive (the default).
Because you have adequate space on the OS9 drive, that drive should be used for large files, as all movie files are.

* To move the folder, have both windows open and drag the folder icon while holding the option key. If you just drag, that will copy the folder. In that case you can delete the original in a second step.

You always want data-intensive files to be saved to the largest of your partitions; video uses a lot of space.
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