1.It is recommended to use xcopy command to move UPD files between drives in order to inheritable permissions in the new location.
Migrating User Profile Disks in Remote Desktop Services
2.Second question - Can I set (through GPEDIT on the RDS server) to point to an alternate location?
I found following blog mentioned that ProfilesDirectory key under HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\ProfileList was used to store the info of location for profiles.
Mounting RDS User Profile Disks On Another Drive
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Hope this helps and please help to accept as Answer if the response is useful.