Windows Subsystem for Linux is awesome, but it may benefit from storing its drives (VHD's) on another disk.
You can run this command to list all containers. Each container has a volume attached (VHD) and can operate independently. Usually, you'll have one container for your usage (the default) - but other tools may make their own - like Docker Desktop which now uses the WSL system to run docker in.
The output may look like:
Windows Subsystem for Linux Distributions:
Move a container
Before moving a container, I can recommend shutting down WSL. This will probably preempt issues of all sorts.
Each container can be moved with:
wsl --export ubuntu N:\ubuntu.tar
wsl --unregister ubuntu
wsl --import ubuntu N:\WSL\ubuntu N:\ubuntu.tar --version 2
The above commands export a named container, "ubuntu" to a tar file. Then we remove the container and re-register it in a new location.
The file can be deleted afterwards.