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They should actually be on different disks. Unless this is a test machine with limited activity. If this is a production server, Windows, TSM or DB2 will crash when (not if) C: gets full. Plus the performance will be terrible.You also need to specify different paths for the DB and log, they can't lay on the same folder.
I strongly recommend that you review the checklist for the database config:I get the format complete with return code 499, how do I proceed?