Creating VHD's on Windows7

Hi, I hope I do this right, it is my first question.
I am trying to follow dwarkarao's "how to create new virtual drive on Windows 7? Point 4: Specify Location... what should I put there? I wanted to
split the 1 TB into 2 VHD's, one 300GB and the other 200GB and leave 500GB.
Has anyone done this before and can give me some advise pls..
Thanks in advance and Merry Xmas to all.
Bernie