UPDATE: Problem solved.
The online auto-download and install of SP3 will use the C: drive to unpack/decompress the installation files, whereas by first downloading the entire SP3 file and installing off a flash drive will offer "custom" option including where the temporary decompressed files should go .... I simply chose the D: drive.
The SP3 install went fine although left with only about 150Mb free space on the C: drive, hardly enough room for the system to breathe or accommodate more endless Win XP updates.
Deleting the detritus from myriad downloads (C:\windows\softwaredistribution\download) released about 800Mb. If happy that SP3 is stable and unlikely to need to roll-back/uninstall it, then deleting the uninstall files means gaining another 700Mb.
I also reinstalled non-system dependent applications (AVG, Skype, CCleaner, Acrobat, etc), onto the D: drive.
Thanks to all that offered assistance,