How do I get the system to D: so I can boot off of it and remove the C: drive? (I want to give it to my eldest as a hand-me-down.)
OK, not exactly what you want to hear, but it will be your best option. It’s really not that difficult, but you must be careful, so read on…
I’m not familiar with Ghost, but it’s an option. However, since you already have a Windows 98 CD (full CD I hope, and not a restore disk from the manufacturer), your best bet would be to treat D: as a blank drive and load Windows onto it. You would lose whatever is on D: now, unless you have some way of backing up any data or work files, or any original downloaded software. Also remember that either way you will need to switch your jumper settings on the drives. Right now, C: is jumpered to be your master drive, and D: is your slave drive. I hope you have documentation! (though you could find it on the Web) However, if both drives are by the same manufacturer, the necessary jumper settings for master or slave would likely be the same, so you could just switch the settings. Always be careful of static electricity. If you can do this work in a room without carpeting, do so. Make sure to touch a part of the metal chassis before touching anything electronic.
Check your current CMOS settings for your drives. Most systems will allow you to print out your configuration for all settings - IRQs, options, and most importantly, hard drive info such as number of heads, cylinders. Make sure you record this information before doing anything to your system! Take note if your system will set your hard drive settings automatically. If so, then it will recognize the current D: drive after you switch it to C:. If not, you can enter your settings manually.
Even if you could save your software on D:, you would still need to re-install it. The programs that are running on both the C: and D: drives are part of the registry for the version of Windows that’s currently on your C: drive (boot drive). In order for them to work, they will need to be installed under the version of Windows that will be installed on D:. Re-installing software isn’t that difficult, as long as you backup any work (.doc files, projects, etc). If you have a CD writer, you can back your stuff up to CD-RW or CD-R. If you include the original downloaded files, just copy them back over after loading Windows. You may just want to download most or all of your stuff, since newer versions would be available.
I’m not sure, but I think if you use Ghost, it will overwrite some or all of what’s on D: now, and replace it with the contents of C:. You’ll have to look into that, or maybe someone else here can answer that.
I have the Windows 98 CD, but all the other applications were downloads, and I could never get them all set up again.
I’m hoping there’s a way to move them over after I get a system on d: ? 
After switching your jumpers, unplug the power cable from the current C:. Now that the current D: is jumpered to be the master drive, boot off of your Windows CD and install. If you like the way your icon fonts, window colors, and all that stuff are now, record all your settings (right click desktop, choose properties, appearance tab) so you can restore them after loading Windows.
Once you are running on the D: drive, shut down, connect your power cable to your 2GB slave drive, and start the system. Windows should now recognize this as a D: drive, even though it has boot information on it. You can probably still run programs that are on there (I did this same thing 6 months ago). You can then move any software over that you want to keep, but remember, if they are applications, you’ll need to reload them after removing the 2GB drive.
If you’re not completely familiar with what you need to do, I would strongly suggest you search the internet for any of the many sites out there which will explain what you need to do, probably clearer than I have here! If I find some, I’ll post them later. The whole process isn’t that difficult, but there’s some work involved. Again, maybe Ghost will work for you, but as flaky as Windows is, and especially if your 2GB drive has been running for a couple years or more, you would be better off with a fresh install. If your system has a habit of locking up on you at certain times (assuming no hardware problems - memory in particular), you really should reload Windows instead of trying to clone your current version. You’ll only copy the problem over, and will likely become worse.
If any of this is helpful, and/or you run into a problem, you can always e-mail me if you’d like. Good luck!