I had an interesting thing happen to me today.
I had a Windows 7 Pro machine that I'd moved Users folder to drive D. I cloned all the disks, then did a clean (I think) install of Windows 10 2004, but did not format any disk. I just told the installer I didn't want to keep anything.
I created a test user, called "test," so I could edit the relocate.xml file on the D drive (to update it to Windows 10 standards).
My users folder is ALREADY on the D drive, and does not appear on the C drive at all.
I created "test2" to test whether new user profiles would also go to the D drive. The new test user's file folder showed up on the D drive.
Does anyone see any reason not to go ahead with the rest of the computer set-up (installing necessary programs, etc.) without worrying about using Option 1?