Take a look at
msdn.microsoft.com/.../spsdk11
/Client_API/spClientAPI.asp

I know that's for SharePoint Team Services but the same DLL will more
than likely be useable in your case. The OpenDocuments class has a
CreateNewDocument method that might help.

The DLL you mentioned is not likely to be
useable in my case. CreateNewDocument creates a document  based ont he
template provided.However, what I would like to have is to copy  the
document which is already present in SPS 2001 and store it to a drive
(e.g. C drive).

Any help me in this regard is welcome.

My idea was that you would use your original document  as the template
parameter - a template is nothing other than a document itself...