No, it is not possible to control what drives Windows Home Server puts copies of your data on. In general, if you have plenty of free space you won't have much other than "tombstones" on D:. It really won't matter, however. If you turn on duplication for a share, the data for that share will be stored on two physical drives, and if you don't, you're already accepting that the loss of a single drive could mean the loss of some files. The system drive isn't special in that regard.
Also, you can't control the size of the system partition (it will be 20 GB), and the system drive will be split between that and D:.
I'm not on the WHS team, I just post a lot. :)