You possibly didn't need to create a larger partition to install SP2.

All service packs (and many other pieces of software) are unpacked into your TEMP folder before being installed. By default this is in the "Documents and Settings" area of the current user, which is usually on the system drive.

You can change the TEMP folder by looking in Control Panel/System, selecting the Advanced tab and clicking the Environment variables. At the top of the new window you will see where the TEMP folder is currently located and you can move this to a more useful place if you wish.