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This definitely works for all versions of Windows server up to and including 2003

The servicepackfiles directory can grow to an enormous size over time and if the free space on the drive becomes an issue, this is one place where it is relatively easy to make room. Assuming you have another partition/drive to move this to that is.

%windir%\servicepackfiles is where the directory is located

Create a directory on another drive, I tend to make another windows directory and move the servicepackfiles (including subfolders) directory there

Run regedit and navigate to the following key
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Setup

There are possibly two keys which require their values changed
ServicePackCachePath
ServicePackSourcePath

SourcePath will read something like c:\winnt\ServicePackFiles
CachePath will read something like c:\winnt\ServicePackFiles\ServicePackCache
(dependant on OS, might be windows not winnt)

Change these values to reflect where the directory has been moved to.

Sometimes the I386 directory can be within %windir% and this runs to several hundred megabytes.
Look in the same registry section and if there is SourcePath and it pointing to %windir% then this means that within the windows directory there is an I386 directory.
If you have a D: drive/partition then move the I386 directory to the root of that drive and change the SourcePath entry to d:\

Instant savings.