That directory gets used when STSADM or SMigrate are used to backup and restore
sites. You can safely delete everything in there, so long as you aren't in the
process of installing anything. Any files  in there that are not safe to delete
should be locked and you shouldn't be able to delete anyway. I have a nightly
process that runs on all my WFEs that moves around some log files, stuff like
that. I've added a line that empties out this directory every night and I've
never seen anything bad happen because of that.

Also, if this is your indexer, it's used by it as well when it streams
files down for indexing.

Keep in mind that these files  will be orphaned here for two reasons

1) A time out occurs while indexing a large file. There is a fix
for that here: http://support.microsoft.com/kb/894534

2) A search daemon crashes while indexing a file, in this case the
reference to the file from the process is lost, and the file is just
orphaned there.

a. The search daemons will not record a file as being successfully
indexed until the entire process is complete, and it signals
MSSearch.exe of the completion. Therefore, if the daemon crashes, a new
daemon might be fired up to try to re-index the file.

What I did was write a batch file that deletes all the temp  files in
that directory every night. The files  will get recreated each day
but at least it will help keep them smaller.

I had the same problem last year and ended up having a server go down
because of it. Turned out that it was created by admins who had been
using FP to modify content as well as perform site backups and
restores. No idea why the temp  file never cleared itself but what I
did was contact all my admins to make sure that they had nothing
pending in FrontPage and then I deleted the whole kit and kaboodle.
Now I take a look at that folder every few weeks but the problem has
never repeated itself since, or better said, I catch it before it
ever gets too far.

One of the admins decided to just go ahead and DELETE the contents before
knowing what was in it (not so happy about that, but that's another issue ;)
) so this has cleared up some of the issues. I have asked to get a script
installed to delete these files  every day so hopefully this won't be an
issue anymore.

Suggestion:

The windows temp  directory should never be on the OS drive.

Several SharePoint processes use this directory.

One that comes to mind is the Content Deployment which will fail if
there is not enough room in the temp directory.

I would recommend another spindle, not just another partition.

How do you move the windows temp  directory from c:\windows\temp to
another spindle ?

This can be done by navigating to: Control Panel -> System -> Advanced ->
Environmental Variables

Look for the TEMP and TMP location variables and make applicable changes.

Add a hard drive.

Change system temp  directory in System Properties > Advanced tab
>Environmental Variables button.