By default ASP.NET's compiled files (Along with VB or C#) are saved and created in C:\WINDOWS\Microsoft.NET\Framework\v2.0.50727\Temporary ASP.NET Files\root...
Is there a way to change it? or is it recommended to keep it at default? I am asking about changing it because what if you format the c drive? or some other reason as keeping functional files in a separate folder away from windows files.
If your c drive was formatted, when the system was recovered, when IIS restarts the assemblies will be recompiled. This MSDN article explains when the recompilation occurs: http://msdn.microsoft.com/en-us/library/ms366723.aspx
As the folder suggests, the folder is for "temporary" compiled files. You can pre-compile your web site and put them in your bin folder of your virtual directory. This will speed up the pre-compilation, but will still put them in the temporary folder. To find out how to pre-compile your ASP .Net application: http://msdn.microsoft.com/en-us/library/ms227972.aspx