I thought the issue was only in ARCGIS but it seems that ERDAS does the same thing. I have my C with 1.7TB and my D with 10TB and my scratch set to d:\scratch but still ERDAS (and ESRI) fills my profile with it's temp data...why? see the image below (in this example I have tried to set the temp space to c:\scratch)
In ARCGIS I have tried C:\Program Files (x86)\ArcGIS\Desktop10.0\Utilities\AdvancedArcMapSettings.exe--> run as admin-->System Paths-->last option "Output Temp file path" and set to D:\scratch.
I have tried "solutions" from http://forums.arcgis.com/threads/3300-ArcGIS-10-Default-Geodatabase
How can we resolve this?