F@ck me sideways and call me Shirley
I've always liked using EASUS' software because it always does what it says on the tin and is easy to use and can cut times but holy cow this free tool is awesome!
http://www.partition-tool.com/personal.htmI managed to shrink a C: create another partition from the now free space, and then Merged the C: and E: WITHIN Windows in under 1 minute! though it needed to restart afterwards to run the tasks and it was on a Virtual Machine in Virtual Box. I'll be keeping that installed then....
As always backup anything you want to keep in the unlikely event it kills the partition and you can't recover the data.
It in action on rebooting:

Update:
Virtual machine won't boot now, gets stuck on the Windows 7 Starting Windows screen

This is why you backup before you do something like this