The current C drive, if its a stick is probably in gigabytes, not Mbs. Now that should be more than enough to install and run Win 11 with room left over.
It sounds to me that your problem may be with RAM if your'e running into problems with things that auto load and run in the background. So first, get rid of everything not necessary in your start-up folder or via task manager.
Then the 2.5 can be mangled into some drive space and used for installing programs, games and storing your own stuff. You are only limited by the number of SATA connections in your computer - I have six or seven physical and logical drives. My C drive is relatively small - 250gb but I have several terabytes hanging off the SATA ports.
There used to be a site called Black Viper windows configurations. He's closed down but his scripts are still online. This can pare back a lot of the junk services that windows runs automatically. https://www.majorgeeks.com/files/details/blackviperscript.html
Personally, I despise giving space and processor cycles to stuff I neither use nor want, so I reckon you should start there. There's also an interesting thread here about Win 11 services: https://www.elevenforum.com/t/windows-11-equivalent-to-the-old-black-viper-services-list.12127/
Good luck and I'd be keen to hear what you decide.
Edit: Almost forgot - turn off the indexing service, it chews up RAM and space. If you need to search, there's a freebie called 'Everything' that is super quick and lightweight. https://www.voidtools.com/support/everything/