Yep, you can have the 2 OS completely independent and boot each with the BIOS boot menu -- F8, F12.
Linux doesn't use letters, your C: drive will probably be shown as /dev/sda and your D: as /dev/sdb and the installer should also show the volume label on your Windows NTFS disk which will help you make sure to install Linux on the OTHER disk. So if you install on /dev/sdb and put the boot loader on /dev/sdb as well, your windows disk will be untouched. Also since the 2 disks will have their own boot loader, you could remove either one and the other will still boot ok.
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