When deploying a Windows 7 image using SCCM 2012 SP1, I noticed that the drive that it was defaulting to install to was D: and not C:. After a little head scratching I found a new variable that was added to SP1 called OSDPreserveDriveLetter.
Here is the official word from Microsoft.com as to what the OSDPreserveDriveLetter is used for:
OSDPreserveDriveLetter: This variable determines whether the task
sequence uses the drive letter on the operating system image WIM file.
In Configuration Manager with no service pack, the drive letter on the
WIM file was used when it applied the operating system image WIM file.
In Configuration Manager SP1, you can set the value for this variable to
False to use the drive letter that you specify in the task sequence.
Here is how I fixed my issue. I had to manually set the OSDPreserveDriveLetter variable to false by adding a Set Task Sequence Variable as shown below.
Next I set a drive letter variable for the sequence.
Then this variable can then be used in the Apply Operating System task.
Now when you run your OSD, Windows 7 should install to the first drive letter C: drive instead of D:.