Think of your settings being a blob of data in the google cloud. When you launch chrome and sign in you basically have a vanilla browser. If your sync-all setting is on it will immediately copy the settings from the cloud to your browser. It will also undo any local changes made to the browser...
Making your windows partition smaller may a have speed benefit. I remember reading something about clusters or sectors being smaller if you use a smaller partition, thus making certain read/writes more efficient.
Very interesting case. I suppose this is why some guides recommend disconnecting all other drives when installing a new OS/Windows--I wonder if the HDD partitions would have been accessible if you had done that...maybe it can't be avoided. The why is just as interesting as the how.
Anyway...