Welcome to the forum.
In Edit>Preferences>Scratch Disks, you can direct PrE to use other drives and folders for the Preview Files. After you make that change to D:\, exit, then re-launch PrE, to make sure that the change takes place.
What version of Premiere Elements are you working with and on what computer operating system is it running?
For now I am assuming Premiere Elements 12 on Windows 7, 8, or 8.1 64 bit.
Please let us know where you have the other categories under Scratch Disks located - available space
Edit Menu/Preferences/Scratch Disks
Media Cache (these are conformed audio files)
as well as Edit Menu/Preferences/Media
Media Cache Database
This one is dominated by the program as to where it is going to be
Local Disk C
and in the Common Folder, Media Cache Database (these are conformed video files)
It seems that the issue is with the Preview Files - the Rendered Files, and not other possible Scratch Disks.
Although vacation1997 posted with the hard drive space concerns aimed at preview files from TImeline render, I thought it important to get an overview of the existing Scratch Disks situation. The issue is really about a 125 GB SSD C drive and hard drive space allocation, with preview files being one of the contributors to the matter.
We hope that vacation1997 can profit from being pointed to an overview of the Scratch Disks situation as it affects hard drive space consideration.